Correlation Between Genmab AS and Bang Olufsen

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

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

Diversification Opportunities for Genmab AS and Bang Olufsen

-0.77

Correlation Coefficient

Genmab AS  Bang Olufsen

Pay attention - limited upside

The 3 months correlation between Genmab and Bang is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Genmab AS and Bang Olufsen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bang Olufsen and Genmab AS 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 Genmab AS are associated (or correlated) with Bang Olufsen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bang Olufsen has no effect on the direction of Genmab AS i.e., Genmab AS and Bang Olufsen go up and down completely randomly.

Pair Corralation between Genmab AS and Bang Olufsen

Assuming the 90 days trading horizon Genmab AS is expected to under-perform the Bang Olufsen. But the stock apears to be less risky and, when comparing its historical volatility, Genmab AS is 1.02 times less risky than Bang Olufsen. The stock trades about -0.2 of its potential returns per unit of risk. The Bang Olufsen is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  865.00  in Bang Olufsen on September 3, 2024 and sell it today you would earn a total of  112.00  from holding Bang Olufsen or generate 12.95% return on investment over 90 days.

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

Genmab AS  vs.  Bang Olufsen

Genmab AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genmab AS 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 basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Bang Olufsen

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bang Olufsen are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Bang Olufsen may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Genmab AS and Bang Olufsen

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

The idea behind Genmab AS and Bang Olufsen 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.