Correlation Between Ansell and Coloplast A/S

Can any of the company-specific risk be diversified away by investing in both Ansell and Coloplast A/S 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 Ansell and Coloplast A/S into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ansell Limited and Coloplast AS, you can compare the effects of market volatilities on Ansell and Coloplast A/S 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 Ansell with a short position of Coloplast A/S. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ansell and Coloplast A/S.

Diversification Opportunities for Ansell and Coloplast A/S

-0.53

Correlation Coefficient

Ansell  Coloplast A/S

Excellent diversification

The 3 months correlation between Ansell and Coloplast is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Ansell Limited and Coloplast AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coloplast A/S and Ansell 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 Ansell Limited are associated (or correlated) with Coloplast A/S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coloplast A/S has no effect on the direction of Ansell i.e., Ansell and Coloplast A/S go up and down completely randomly.

Pair Corralation between Ansell and Coloplast A/S

Assuming the 90 days horizon Ansell Limited is expected to generate 1.02 times more return on investment than Coloplast A/S. However, Ansell is 1.02 times more volatile than Coloplast AS. It trades about 0.12 of its potential returns per unit of risk. Coloplast AS is currently generating about -0.07 per unit of risk. If you would invest  1,844  in Ansell Limited on September 5, 2024 and sell it today you would earn a total of  236.00  from holding Ansell Limited or generate 12.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Ansell Limited  vs.  Coloplast AS

Ansell Limited

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ansell Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, Ansell reported solid returns over the last few months and may actually be approaching a breakup point.

Coloplast A/S

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Coloplast AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Ansell and Coloplast A/S

The main advantage of trading using opposite Ansell and Coloplast A/S positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ansell position performs unexpectedly, Coloplast A/S 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 A/S will offset losses from the drop in Coloplast A/S's long position.

The idea behind Ansell Limited and Coloplast 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.

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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.