Correlation Between DSV Panalpina and Coloplast

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

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

Diversification Opportunities for DSV Panalpina and Coloplast

-0.51

Correlation Coefficient

DSV Panalpina  Coloplast

Excellent diversification

The 3 months correlation between DSV and Coloplast is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding DSV Panalpina AS and Coloplast AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coloplast AS and DSV Panalpina 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 DSV Panalpina AS are associated (or correlated) with Coloplast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coloplast AS has no effect on the direction of DSV Panalpina i.e., DSV Panalpina and Coloplast go up and down completely randomly.

Pair Corralation between DSV Panalpina and Coloplast

Assuming the 90 days trading horizon DSV Panalpina AS is expected to generate 1.23 times more return on investment than Coloplast. However, DSV Panalpina is 1.23 times more volatile than Coloplast AS. It trades about 0.17 of its potential returns per unit of risk. Coloplast AS is currently generating about -0.05 per unit of risk. If you would invest  122,500  in DSV Panalpina AS on August 31, 2024 and sell it today you would earn a total of  26,350  from holding DSV Panalpina AS or generate 21.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

DSV Panalpina AS  vs.  Coloplast AS

DSV Panalpina AS

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DSV Panalpina AS are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, DSV Panalpina displayed solid returns over the last few months and may actually be approaching a breakup point.

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. Despite somewhat strong essential indicators, Coloplast is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with DSV Panalpina and Coloplast

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

The idea behind DSV Panalpina AS and Coloplast AS 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .