Correlation Between GN Store and H Lundbeck
Can any of the company-specific risk be diversified away by investing in both GN Store and H Lundbeck 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 H Lundbeck 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 H Lundbeck AS, you can compare the effects of market volatilities on GN Store and H Lundbeck 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 H Lundbeck. Check out your portfolio center. Please also check ongoing floating volatility patterns of GN Store and H Lundbeck.
Diversification Opportunities for GN Store and H Lundbeck
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GN Store and HLUN-B is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding GN Store Nord and H Lundbeck AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on H Lundbeck AS 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 H Lundbeck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of H Lundbeck AS has no effect on the direction of GN Store i.e., GN Store and H Lundbeck go up and down completely randomly.
Pair Corralation between GN Store and H Lundbeck
Assuming the 90 days horizon GN Store Nord is expected to under-perform the H Lundbeck. In addition to that, GN Store is 1.64 times more volatile than H Lundbeck AS. It trades about 0.0 of its total potential returns per unit of risk. H Lundbeck AS is currently generating about 0.01 per unit of volatility. If you would invest 4,132 in H Lundbeck AS on October 29, 2024 and sell it today you would earn a total of 6.00 from holding H Lundbeck AS or generate 0.15% 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. H Lundbeck AS
Performance |
| Timeline |
| GN Store Nord |
| H Lundbeck AS |
GN Store and H Lundbeck Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GN Store and H Lundbeck
The main advantage of trading using opposite GN Store and H Lundbeck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GN Store position performs unexpectedly, H Lundbeck 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 H Lundbeck will offset losses from the drop in H Lundbeck's long position.The idea behind GN Store Nord and H Lundbeck AS pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| H Lundbeck vs. H Lundbeck AS | H Lundbeck vs. GN Store Nord | H Lundbeck vs. FLSmidth Co | H Lundbeck vs. ALK Abell AS |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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