Correlation Between GN Store and CochLear
Can any of the company-specific risk be diversified away by investing in both GN Store and CochLear at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining GN Store and CochLear into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GN Store Nord and CochLear Ltd ADR, you can compare the effects of market volatilities on GN Store and CochLear and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in GN Store with a short position of CochLear. Check out your portfolio center. Please also check ongoing floating volatility patterns of GN Store and CochLear.
Diversification Opportunities for GN Store and CochLear
Modest diversification
The 3 months correlation between GGNDF and CochLear is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding GN Store Nord and CochLear Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CochLear ADR and GN Store is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on GN Store Nord are associated (or correlated) with CochLear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CochLear ADR has no effect on the direction of GN Store i.e., GN Store and CochLear go up and down completely randomly.
Pair Corralation between GN Store and CochLear
Assuming the 90 days horizon GN Store Nord is expected to under-perform the CochLear. In addition to that, GN Store is 2.48 times more volatile than CochLear Ltd ADR. It trades about -0.21 of its total potential returns per unit of risk. CochLear Ltd ADR is currently generating about 0.24 per unit of volatility. If you would invest 9,333 in CochLear Ltd ADR on August 30, 2024 and sell it today you would earn a total of 656.00 from holding CochLear Ltd ADR or generate 7.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GN Store Nord vs. CochLear Ltd ADR
Performance |
| Timeline |
| GN Store Nord |
| CochLear ADR |
GN Store and CochLear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GN Store and CochLear
The main advantage of trading using opposite GN Store and CochLear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GN Store position performs unexpectedly, CochLear can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in CochLear will offset losses from the drop in CochLear's long position.| GN Store vs. Brainsway | GN Store vs. Bluejay Diagnostics | GN Store vs. Venus Concept | GN Store vs. Icecure Medical |
| CochLear vs. Smith Nephew SNATS | CochLear vs. Integer Holdings Corp | CochLear vs. Demant AS ADR | CochLear vs. GN Store Nord |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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