Correlation Between ROCKWOOL International and Demant AS
Can any of the company-specific risk be diversified away by investing in both ROCKWOOL International and Demant AS 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 Demant AS 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 Demant AS, you can compare the effects of market volatilities on ROCKWOOL International and Demant AS 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 Demant AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of ROCKWOOL International and Demant AS.
Diversification Opportunities for ROCKWOOL International and Demant AS
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ROCKWOOL and Demant is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding ROCKWOOL International AS and Demant AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Demant 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 Demant AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Demant AS has no effect on the direction of ROCKWOOL International i.e., ROCKWOOL International and Demant AS go up and down completely randomly.
Pair Corralation between ROCKWOOL International and Demant AS
Assuming the 90 days trading horizon ROCKWOOL International AS is expected to under-perform the Demant AS. In addition to that, ROCKWOOL International is 1.74 times more volatile than Demant AS. It trades about -0.19 of its total potential returns per unit of risk. Demant AS is currently generating about 0.18 per unit of volatility. If you would invest 25,160 in Demant AS on September 1, 2024 and sell it today you would earn a total of 1,760 from holding Demant AS or generate 7.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
ROCKWOOL International AS vs. Demant AS
Performance |
| Timeline |
| ROCKWOOL International |
| Demant AS |
ROCKWOOL International and Demant AS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ROCKWOOL International and Demant AS
The main advantage of trading using opposite ROCKWOOL International and Demant AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ROCKWOOL International position performs unexpectedly, Demant AS 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 Demant AS will offset losses from the drop in Demant AS'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 |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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