Correlation Between Coloplast and Femasys

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

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

Diversification Opportunities for Coloplast and Femasys

-0.28

Correlation Coefficient

Coloplast  Femasys

Very good diversification

The 3 months correlation between Coloplast and Femasys is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Coloplast A and Femasys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Femasys 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 A are associated (or correlated) with Femasys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Femasys has no effect on the direction of Coloplast i.e., Coloplast and Femasys go up and down completely randomly.

Pair Corralation between Coloplast and Femasys

Assuming the 90 days horizon Coloplast A is expected to under-perform the Femasys. But the pink sheet apears to be less risky and, when comparing its historical volatility, Coloplast A is 3.34 times less risky than Femasys. The pink sheet trades about -0.12 of its potential returns per unit of risk. The Femasys is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  112.00  in Femasys on November 28, 2024 and sell it today you would earn a total of  46.00  from holding Femasys or generate 41.07% return on investment over 90 days.

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

Coloplast A  vs.  Femasys

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 latest weak performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Femasys

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Femasys are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, Femasys showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Coloplast and Femasys

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

The idea behind Coloplast A and Femasys 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.