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 Ltd ADR, 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

0.0

Correlation Coefficient

Coloplast A/S  Ansell

Pay attention - limited upside

The 3 months correlation between Coloplast and Ansell is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Coloplast AS and Ansell Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ansell Ltd ADR 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 Ltd ADR 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

If you would invest (100.00) in Ansell Ltd ADR on December 30, 2024 and sell it today you would earn a total of  100.00  from holding Ansell Ltd ADR or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Coloplast AS  vs.  Ansell Ltd ADR

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 nearly stable fundamental drivers, Coloplast A/S is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Ansell Ltd ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ansell Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, Ansell is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

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 Ltd ADR 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.

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 Bonds Directory module to find actively traded corporate debentures issued by US companies.