Correlation Between Tryg AS and H Lundbeck
Can any of the company-specific risk be diversified away by investing in both Tryg AS 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 Tryg AS and H Lundbeck into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tryg AS and H Lundbeck AS, you can compare the effects of market volatilities on Tryg AS 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 Tryg AS with a short position of H Lundbeck. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tryg AS and H Lundbeck.
Diversification Opportunities for Tryg AS and H Lundbeck
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Tryg and HLUN-A is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Tryg AS 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 Tryg AS 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 Tryg AS 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 Tryg AS i.e., Tryg AS and H Lundbeck go up and down completely randomly.
Pair Corralation between Tryg AS and H Lundbeck
Assuming the 90 days trading horizon Tryg AS is expected to generate 4.04 times less return on investment than H Lundbeck. But when comparing it to its historical volatility, Tryg AS is 1.54 times less risky than H Lundbeck. It trades about 0.02 of its potential returns per unit of risk. H Lundbeck AS is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,399 in H Lundbeck AS on September 1, 2024 and sell it today you would earn a total of 1,221 from holding H Lundbeck AS or generate 50.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tryg AS vs. H Lundbeck AS
Performance |
| Timeline |
| Tryg AS |
| H Lundbeck AS |
Tryg AS and H Lundbeck Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tryg AS and H Lundbeck
The main advantage of trading using opposite Tryg AS and H Lundbeck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tryg AS 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 Tryg AS 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. Nordea Bank Abp | H Lundbeck vs. FLSmidth Co |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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