Correlation Between Tryg AS and ROCKWOOL International
Can any of the company-specific risk be diversified away by investing in both Tryg AS and ROCKWOOL International 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 ROCKWOOL International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tryg AS and ROCKWOOL International AS, you can compare the effects of market volatilities on Tryg AS and ROCKWOOL International 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 ROCKWOOL International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tryg AS and ROCKWOOL International.
Diversification Opportunities for Tryg AS and ROCKWOOL International
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Tryg and ROCKWOOL is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Tryg AS and ROCKWOOL International AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ROCKWOOL International 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 ROCKWOOL International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ROCKWOOL International has no effect on the direction of Tryg AS i.e., Tryg AS and ROCKWOOL International go up and down completely randomly.
Pair Corralation between Tryg AS and ROCKWOOL International
Assuming the 90 days trading horizon Tryg AS is expected to generate 1.61 times less return on investment than ROCKWOOL International. But when comparing it to its historical volatility, Tryg AS is 5.31 times less risky than ROCKWOOL International. It trades about 0.29 of its potential returns per unit of risk. ROCKWOOL International AS is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 255,500 in ROCKWOOL International AS on November 27, 2024 and sell it today you would earn a total of 15,500 from holding ROCKWOOL International AS or generate 6.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tryg AS vs. ROCKWOOL International AS
Performance |
| Timeline |
| Tryg AS |
| ROCKWOOL International |
Tryg AS and ROCKWOOL International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tryg AS and ROCKWOOL International
The main advantage of trading using opposite Tryg AS and ROCKWOOL International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tryg AS position performs unexpectedly, ROCKWOOL International 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 ROCKWOOL International will offset losses from the drop in ROCKWOOL International's long position.The idea behind Tryg AS and ROCKWOOL International 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.| ROCKWOOL International vs. ROCKWOOL International AS | ROCKWOOL International vs. FLSmidth Co | ROCKWOOL International vs. Royal Unibrew AS | ROCKWOOL International vs. Tryg 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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