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

0.21

Correlation Coefficient

Genmab AS  Embla Medical

Modest diversification

The 3 months correlation between Genmab and Embla is 0.21. 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 under-perform the Embla Medical. In addition to that, Genmab AS is 1.02 times more volatile than Embla Medical hf. It trades about -0.04 of its total potential returns per unit of risk. Embla Medical hf is currently generating about 0.01 per unit of volatility. If you would invest  3,180  in Embla Medical hf on December 1, 2024 and sell it today you would earn a total of  130.00  from holding Embla Medical hf or generate 4.09% return on investment over 90 days.

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

Genmab AS  vs.  Embla Medical hf

Genmab AS

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Genmab AS are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Genmab AS is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the 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 rather sound fundamental indicators, Embla Medical is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.