Correlation Between OMX Copenhagen and Flgger Group

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

By analyzing existing cross correlation between OMX Copenhagen All and Flgger group AS, you can compare the effects of market volatilities on OMX Copenhagen and Flgger Group 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 OMX Copenhagen with a short position of Flgger Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of OMX Copenhagen and Flgger Group.

Diversification Opportunities for OMX Copenhagen and Flgger Group

-0.05

Correlation Coefficient

OMX Copenhagen  Flgger Group

Good diversification

The 3 months correlation between OMX and Flgger is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding OMX Copenhagen All and Flgger group AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flgger group AS and OMX Copenhagen 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 OMX Copenhagen All are associated (or correlated) with Flgger Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flgger group AS has no effect on the direction of OMX Copenhagen i.e., OMX Copenhagen and Flgger Group go up and down completely randomly.

Pair Corralation between OMX Copenhagen and Flgger Group

Assuming the 90 days trading horizon OMX Copenhagen All is expected to under-perform the Flgger Group. But the index apears to be less risky and, when comparing its historical volatility, OMX Copenhagen All is 1.12 times less risky than Flgger Group. The index trades about -0.07 of its potential returns per unit of risk. The Flgger group AS is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  32,600  in Flgger group AS on December 23, 2024 and sell it today you would earn a total of  1,000.00  from holding Flgger group AS or generate 3.07% return on investment over 90 days.

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

OMX Copenhagen All  vs.  Flgger group AS

Pair Trading with OMX Copenhagen and Flgger Group

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

The idea behind OMX Copenhagen All and Flgger group 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 Commodity Directory module to find actively traded commodities issued by global exchanges.