Correlation Between ROCKWOOL International and GN Store
Can any of the company-specific risk be diversified away by investing in both ROCKWOOL International and GN Store 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 GN Store 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 GN Store Nord, you can compare the effects of market volatilities on ROCKWOOL International and GN Store 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 GN Store. Check out your portfolio center. Please also check ongoing floating volatility patterns of ROCKWOOL International and GN Store.
Diversification Opportunities for ROCKWOOL International and GN Store
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between ROCKWOOL and GN Store is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding ROCKWOOL International AS and GN Store Nord in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GN Store Nord 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 GN Store. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GN Store Nord has no effect on the direction of ROCKWOOL International i.e., ROCKWOOL International and GN Store go up and down completely randomly.
Pair Corralation between ROCKWOOL International and GN Store
Assuming the 90 days trading horizon ROCKWOOL International is expected to generate 8.43 times less return on investment than GN Store. But when comparing it to its historical volatility, ROCKWOOL International AS is 3.03 times less risky than GN Store. It trades about 0.05 of its potential returns per unit of risk. GN Store Nord is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 13,610 in GN Store Nord on November 5, 2024 and sell it today you would earn a total of 1,210 from holding GN Store Nord or generate 8.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ROCKWOOL International AS vs. GN Store Nord
Performance |
| Timeline |
| ROCKWOOL International |
| GN Store Nord |
ROCKWOOL International and GN Store Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ROCKWOOL International and GN Store
The main advantage of trading using opposite ROCKWOOL International and GN Store positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ROCKWOOL International position performs unexpectedly, GN Store 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 GN Store will offset losses from the drop in GN Store'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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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