Correlation Between Coloplast and Ryman Hospitality

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

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

Diversification Opportunities for Coloplast and Ryman Hospitality

-0.43

Correlation Coefficient

Coloplast  Ryman Hospitality

Very good diversification

The 3 months correlation between Coloplast and Ryman is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Coloplast AS and Ryman Hospitality Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ryman Hospitality and Coloplast 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 Coloplast AS are associated (or correlated) with Ryman Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ryman Hospitality has no effect on the direction of Coloplast i.e., Coloplast and Ryman Hospitality go up and down completely randomly.

Pair Corralation between Coloplast and Ryman Hospitality

Assuming the 90 days trading horizon Coloplast AS is expected to under-perform the Ryman Hospitality. In addition to that, Coloplast is 1.11 times more volatile than Ryman Hospitality Properties. It trades about -0.03 of its total potential returns per unit of risk. Ryman Hospitality Properties is currently generating about 0.19 per unit of volatility. If you would invest  9,244  in Ryman Hospitality Properties on August 31, 2024 and sell it today you would earn a total of  1,756  from holding Ryman Hospitality Properties or generate 19.0% return on investment over 90 days.

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

Coloplast AS  vs.  Ryman Hospitality Properties

Coloplast AS

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. In spite of rather sound fundamental indicators, Coloplast is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Ryman Hospitality

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ryman Hospitality Properties are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Ryman Hospitality reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Coloplast and Ryman Hospitality

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

The idea behind Coloplast AS and Ryman Hospitality Properties 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.