Correlation Between Coloplast A/S and Ansell

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

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

Diversification Opportunities for Coloplast A/S and Ansell

-0.71

Correlation Coefficient

Coloplast A/S  Ansell

Pay attention - limited upside

The 3 months correlation between Coloplast and Ansell is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Coloplast AS and Ansell Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ansell Limited and Coloplast A/S 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 Ansell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ansell Limited has no effect on the direction of Coloplast A/S i.e., Coloplast A/S and Ansell go up and down completely randomly.

Pair Corralation between Coloplast A/S and Ansell

Assuming the 90 days horizon Coloplast AS is expected to under-perform the Ansell. In addition to that, Coloplast A/S is 59.76 times more volatile than Ansell Limited. It trades about -0.16 of its total potential returns per unit of risk. Ansell Limited is currently generating about -0.15 per unit of volatility. If you would invest  2,342  in Ansell Limited on December 2, 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	Weak
Accuracy	70.49%
Values	Daily Returns

Coloplast AS  vs.  Ansell Limited

Coloplast A/S

Risk-Adjusted Performance

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.

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.

Pair Trading with Coloplast A/S and Ansell

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

The idea behind Coloplast AS and Ansell Limited 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..