Correlation Between Ansell and Coloplast

Can any of the company-specific risk be diversified away by investing in both Ansell and Coloplast 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 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 A, you can compare the effects of market volatilities on Ansell and Coloplast 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. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ansell and Coloplast.

Diversification Opportunities for Ansell and Coloplast

-0.06

Correlation Coefficient

Ansell  Coloplast

Good diversification

The 3 months correlation between Ansell and Coloplast is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Ansell Limited and Coloplast A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coloplast A 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. 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 has no effect on the direction of Ansell i.e., Ansell and Coloplast go up and down completely randomly.

Pair Corralation between Ansell and Coloplast

Assuming the 90 days horizon Ansell Limited is expected to generate 0.01 times more return on investment than Coloplast. However, Ansell Limited is 84.46 times less risky than Coloplast. It trades about -0.13 of its potential returns per unit of risk. Coloplast A is currently generating about -0.04 per unit of risk. If you would invest  2,342  in Ansell Limited on December 30, 2024 and sell it today you would lose (3.00) from holding Ansell Limited or give up 0.13% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Ansell Limited  vs.  Coloplast A

Ansell Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ansell Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Ansell is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Coloplast A

Risk-Adjusted Performance

Very Weak

Over the last 90 days Coloplast A has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental drivers, Coloplast is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ansell and Coloplast

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

The idea behind Ansell Limited and Coloplast A 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..