Correlation Between ROCKWOOL International and GN Store

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

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

Diversification Opportunities for ROCKWOOL International and GN Store

0.16

Correlation Coefficient

ROCKWOOL International  GN Store

Average diversification

The 3 months correlation between ROCKWOOL and GN Store is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding ROCKWOOL International 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 ROCKWOOL International 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 ROCKWOOL International 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 ROCKWOOL International i.e., ROCKWOOL International and GN Store go up and down completely randomly.

Pair Corralation between ROCKWOOL International and GN Store

Assuming the 90 days trading horizon ROCKWOOL International AS is expected to generate 1.27 times more return on investment than GN Store. However, ROCKWOOL International is 1.27 times more volatile than GN Store Nord. It trades about 0.13 of its potential returns per unit of risk. GN Store Nord is currently generating about 0.04 per unit of risk. If you would invest  259,000  in ROCKWOOL International AS on November 29, 2024 and sell it today you would earn a total of  28,600  from holding ROCKWOOL International AS or generate 11.04% return on investment over 90 days.

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

ROCKWOOL International AS  vs.  GN Store Nord

ROCKWOOL International

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ROCKWOOL International AS are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating fundamental indicators, ROCKWOOL International sustained solid returns over the last few months and may actually be approaching a breakup point.

GN Store Nord

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GN Store Nord are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, GN Store is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with ROCKWOOL International and GN Store

The main advantage of trading using opposite ROCKWOOL International and GN Store positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ROCKWOOL International 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 ROCKWOOL International 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.

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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 Transaction History module to view history of all your transactions and understand their impact on performance.