Correlation Between OMX Copenhagen and Conferize

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Can any of the company-specific risk be diversified away by investing in both OMX Copenhagen and Conferize 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 OMX Copenhagen and Conferize into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between OMX Copenhagen All and Conferize AS, you can compare the effects of market volatilities on OMX Copenhagen and Conferize 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 OMX Copenhagen with a short position of Conferize. Check out your portfolio center. Please also check ongoing floating volatility patterns of OMX Copenhagen and Conferize.

Diversification Opportunities for OMX Copenhagen and Conferize

0.82

Correlation Coefficient

OMX Copenhagen

Conferize

Very poor diversification

The 3 months correlation between OMX and Conferize is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding OMX Copenhagen All and Conferize AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Conferize AS and OMX Copenhagen 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 OMX Copenhagen All are associated (or correlated) with Conferize. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Conferize AS has no effect on the direction of OMX Copenhagen i.e., OMX Copenhagen and Conferize go up and down completely randomly.

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Pair Corralation between OMX Copenhagen and Conferize

Assuming the 90 days trading horizon OMX Copenhagen All is expected to generate 0.12 times more return on investment than Conferize. However, OMX Copenhagen All is 8.43 times less risky than Conferize. It trades about -0.14 of its potential returns per unit of risk. Conferize AS is currently generating about -0.03 per unit of risk. If you would invest 184,314 in OMX Copenhagen All on August 25, 2024 and sell it today you would lose (13,544) from holding OMX Copenhagen All or give up 7.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

OMX Copenhagen All vs. Conferize AS

Performance

Timeline

OMX Copenhagen and Conferize Volatility Contrast

Predicted Return Density

Returns

OMX Copenhagen All

Pair trading matchups for OMX Copenhagen

	OMX Copenhagen vs. Nordea Bank Abp
	OMX Copenhagen vs. Moens Bank AS
	OMX Copenhagen vs. Strategic Investments AS
	OMX Copenhagen vs. Prime Office AS

Conferize AS

Pair trading matchups for Conferize

	Conferize vs. Penneo AS
	Conferize vs. Hydract AS
	Conferize vs. Dataproces Group AS

Pair Trading with OMX Copenhagen and Conferize

The main advantage of trading using opposite OMX Copenhagen and Conferize positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OMX Copenhagen position performs unexpectedly, Conferize 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 Conferize will offset losses from the drop in Conferize's long position.

	OMX Copenhagen vs. Nordea Bank Abp
	OMX Copenhagen vs. Moens Bank AS
	OMX Copenhagen vs. Strategic Investments AS
	OMX Copenhagen vs. Prime Office AS

The idea behind OMX Copenhagen All and Conferize 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.

	Conferize vs. Penneo AS
	Conferize vs. Hydract AS
	Conferize vs. Dataproces Group AS

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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 Transaction History module to view history of all your transactions and understand their impact on performance.

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