Correlation Between H Lundbeck and GN Store

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

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

Diversification Opportunities for H Lundbeck and GN Store

0.8

Correlation Coefficient

H Lundbeck  GN Store

Very poor diversification

The 3 months correlation between HLUN-B and GN Store is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding H Lundbeck AS and GN Store Nord in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GN Store Nord and H Lundbeck 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 H Lundbeck AS are associated (or correlated) with GN Store. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GN Store Nord has no effect on the direction of H Lundbeck i.e., H Lundbeck and GN Store go up and down completely randomly.

Pair Corralation between H Lundbeck and GN Store

Assuming the 90 days trading horizon H Lundbeck AS is expected to generate 0.58 times more return on investment than GN Store. However, H Lundbeck AS is 1.72 times less risky than GN Store. It trades about -0.08 of its potential returns per unit of risk. GN Store Nord is currently generating about -0.07 per unit of risk. If you would invest  4,030  in H Lundbeck AS on December 29, 2024 and sell it today you would lose (358.00) from holding H Lundbeck AS or give up 8.88% of portfolio value over 90 days.

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

H Lundbeck AS  vs.  GN Store Nord

H Lundbeck AS

Risk-Adjusted Performance

Very Weak

Over the last 90 days H Lundbeck AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

GN Store Nord

Risk-Adjusted Performance

Very Weak

Over the last 90 days GN Store Nord 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 fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with H Lundbeck and GN Store

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

The idea behind H Lundbeck AS and GN Store Nord 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.

Check out your portfolio center.

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.