Correlation Between Coloplast A/S and Repro Med

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

By analyzing existing cross correlation between Coloplast AS and Repro Med Systems, you can compare the effects of market volatilities on Coloplast A/S and Repro Med 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 Repro Med. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coloplast A/S and Repro Med.

Diversification Opportunities for Coloplast A/S and Repro Med

0.69

Correlation Coefficient

Coloplast A/S  Repro Med

Poor diversification

The 3 months correlation between Coloplast and Repro is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Coloplast AS and Repro Med Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Repro Med Systems 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 Repro Med. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Repro Med Systems has no effect on the direction of Coloplast A/S i.e., Coloplast A/S and Repro Med go up and down completely randomly.

Pair Corralation between Coloplast A/S and Repro Med

Assuming the 90 days horizon Coloplast AS is expected to generate 0.29 times more return on investment than Repro Med. However, Coloplast AS is 3.48 times less risky than Repro Med. It trades about -0.06 of its potential returns per unit of risk. Repro Med Systems is currently generating about -0.15 per unit of risk. If you would invest  10,911  in Coloplast AS on December 29, 2024 and sell it today you would lose (496.00) from holding Coloplast AS or give up 4.55% of portfolio value over 90 days.

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

Coloplast AS  vs.  Repro Med Systems

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.

Repro Med Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days Repro Med Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Coloplast A/S and Repro Med

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

The idea behind Coloplast AS and Repro Med Systems 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.