Correlation Between Schouw and Columbus

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

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

Diversification Opportunities for Schouw and Columbus

-0.02

Correlation Coefficient

Schouw  Columbus

Good diversification

The 3 months correlation between Schouw and Columbus is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Schouw Co and Columbus AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbus AS and Schouw 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 Schouw Co are associated (or correlated) with Columbus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbus AS has no effect on the direction of Schouw i.e., Schouw and Columbus go up and down completely randomly.

Pair Corralation between Schouw and Columbus

Assuming the 90 days trading horizon Schouw Co is expected to under-perform the Columbus. But the stock apears to be less risky and, when comparing its historical volatility, Schouw Co is 1.97 times less risky than Columbus. The stock trades about -0.07 of its potential returns per unit of risk. The Columbus AS is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  874.00  in Columbus AS on September 12, 2024 and sell it today you would earn a total of  151.00  from holding Columbus AS or generate 17.28% return on investment over 90 days.

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

Schouw Co  vs.  Columbus AS

Schouw

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Schouw Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Schouw is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Columbus AS

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Columbus AS are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Columbus exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Schouw and Columbus

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

The idea behind Schouw Co and Columbus 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.

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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.