Correlation Between ROCKWOOL International and Coloplast
Can any of the company-specific risk be diversified away by investing in both ROCKWOOL International and Coloplast 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 ROCKWOOL International and Coloplast into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ROCKWOOL International AS and Coloplast AS, you can compare the effects of market volatilities on ROCKWOOL International and Coloplast 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 ROCKWOOL International with a short position of Coloplast. Check out your portfolio center. Please also check ongoing floating volatility patterns of ROCKWOOL International and Coloplast.
Diversification Opportunities for ROCKWOOL International and Coloplast
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ROCKWOOL and Coloplast is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding ROCKWOOL International AS and Coloplast AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coloplast AS and ROCKWOOL International 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 ROCKWOOL International AS are associated (or correlated) with Coloplast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coloplast AS has no effect on the direction of ROCKWOOL International i.e., ROCKWOOL International and Coloplast go up and down completely randomly.
Pair Corralation between ROCKWOOL International and Coloplast
Assuming the 90 days trading horizon ROCKWOOL International AS is expected to generate 1.2 times more return on investment than Coloplast. However, ROCKWOOL International is 1.2 times more volatile than Coloplast AS. It trades about 0.07 of its potential returns per unit of risk. Coloplast AS is currently generating about 0.0 per unit of risk. If you would invest 164,554 in ROCKWOOL International AS on September 19, 2024 and sell it today you would earn a total of 95,846 from holding ROCKWOOL International AS or generate 58.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ROCKWOOL International AS vs. Coloplast AS
Performance |
| Timeline |
| ROCKWOOL International |
| Coloplast AS |
ROCKWOOL International and Coloplast Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ROCKWOOL International and Coloplast
The main advantage of trading using opposite ROCKWOOL International and Coloplast positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ROCKWOOL International position performs unexpectedly, Coloplast 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 Coloplast will offset losses from the drop in Coloplast's long position.| ROCKWOOL International vs. FLSmidth Co | ROCKWOOL International vs. GN Store Nord | ROCKWOOL International vs. Ambu AS | ROCKWOOL International vs. DSV Panalpina AS |
| Coloplast vs. GN Store Nord | Coloplast vs. Ambu AS | Coloplast vs. ISS AS | Coloplast vs. ROCKWOOL International 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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