Correlation Between LeMaitre Vascular and Coloplast

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

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

Diversification Opportunities for LeMaitre Vascular and Coloplast

0.84

Correlation Coefficient

LeMaitre Vascular  Coloplast

Very poor diversification

The 3 months correlation between LeMaitre and Coloplast is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding LeMaitre Vascular and Coloplast A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coloplast A and LeMaitre Vascular 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 LeMaitre Vascular 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 A has no effect on the direction of LeMaitre Vascular i.e., LeMaitre Vascular and Coloplast go up and down completely randomly.

Pair Corralation between LeMaitre Vascular and Coloplast

Given the investment horizon of 90 days LeMaitre Vascular is expected to generate 1.36 times more return on investment than Coloplast. However, LeMaitre Vascular is 1.36 times more volatile than Coloplast A. It trades about -0.04 of its potential returns per unit of risk. Coloplast A is currently generating about -0.12 per unit of risk. If you would invest  10,358  in LeMaitre Vascular on November 19, 2024 and sell it today you would lose (493.00) from holding LeMaitre Vascular or give up 4.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.36%
Values	Daily Returns

LeMaitre Vascular  vs.  Coloplast A

LeMaitre Vascular

Risk-Adjusted Performance

Very Weak

Over the last 90 days LeMaitre Vascular has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, LeMaitre Vascular is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Coloplast A

Risk-Adjusted Performance

Very Weak

Over the last 90 days Coloplast A has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with LeMaitre Vascular and Coloplast

The main advantage of trading using opposite LeMaitre Vascular and Coloplast positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LeMaitre Vascular 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 LeMaitre Vascular and Coloplast A 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.