Correlation Between Genmab AS and Embla Medical

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

By analyzing existing cross correlation between Genmab AS and Embla Medical hf, you can compare the effects of market volatilities on Genmab AS and Embla Medical 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 Embla Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genmab AS and Embla Medical.

Diversification Opportunities for Genmab AS and Embla Medical

0.42

Correlation Coefficient

Genmab AS  Embla Medical

Very weak diversification

The 3 months correlation between Genmab and Embla is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Genmab AS and Embla Medical hf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Embla Medical hf 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 Embla Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Embla Medical hf has no effect on the direction of Genmab AS i.e., Genmab AS and Embla Medical go up and down completely randomly.

Pair Corralation between Genmab AS and Embla Medical

Assuming the 90 days trading horizon Genmab AS is expected to generate 1.41 times more return on investment than Embla Medical. However, Genmab AS is 1.41 times more volatile than Embla Medical hf. It trades about -0.04 of its potential returns per unit of risk. Embla Medical hf is currently generating about -0.2 per unit of risk. If you would invest  149,250  in Genmab AS on December 30, 2024 and sell it today you would lose (12,850) from holding Genmab AS or give up 8.61% of portfolio value over 90 days.

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

Genmab AS  vs.  Embla Medical hf

Genmab AS

Risk-Adjusted Performance

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 latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Embla Medical hf

Risk-Adjusted Performance

Very Weak

Over the last 90 days Embla Medical hf has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental 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 Genmab AS and Embla Medical

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

The idea behind Genmab AS and Embla Medical hf 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.