Correlation Between Matas AS and ROCKWOOL International

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

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

Diversification Opportunities for Matas AS and ROCKWOOL International

0.16

Correlation Coefficient

Matas AS  ROCKWOOL International

Average diversification

The 3 months correlation between Matas and ROCKWOOL is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Matas AS and ROCKWOOL International AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ROCKWOOL International and Matas 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 Matas AS are associated (or correlated) with ROCKWOOL International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ROCKWOOL International has no effect on the direction of Matas AS i.e., Matas AS and ROCKWOOL International go up and down completely randomly.

Pair Corralation between Matas AS and ROCKWOOL International

Assuming the 90 days trading horizon Matas AS is expected to generate 0.69 times more return on investment than ROCKWOOL International. However, Matas AS is 1.46 times less risky than ROCKWOOL International. It trades about 0.05 of its potential returns per unit of risk. ROCKWOOL International AS is currently generating about -0.04 per unit of risk. If you would invest  12,280  in Matas AS on September 5, 2024 and sell it today you would earn a total of  560.00  from holding Matas AS or generate 4.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Matas AS  vs.  ROCKWOOL International AS

Matas AS

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Matas AS are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Matas AS is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

ROCKWOOL International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ROCKWOOL International AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, ROCKWOOL International is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Matas AS and ROCKWOOL International

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

The idea behind Matas AS and ROCKWOOL International AS 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.