Correlation Between Sharps Technology and Coloplast

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

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

Diversification Opportunities for Sharps Technology and Coloplast

0.17

Correlation Coefficient

Sharps Technology  Coloplast

Average diversification

The 3 months correlation between Sharps and Coloplast is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Sharps Technology and Coloplast A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coloplast A and Sharps Technology 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 Sharps Technology 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 Sharps Technology i.e., Sharps Technology and Coloplast go up and down completely randomly.

Pair Corralation between Sharps Technology and Coloplast

Given the investment horizon of 90 days Sharps Technology is expected to under-perform the Coloplast. In addition to that, Sharps Technology is 11.41 times more volatile than Coloplast A. It trades about -0.17 of its total potential returns per unit of risk. Coloplast A is currently generating about -0.04 per unit of volatility. If you would invest  1,093  in Coloplast A on December 29, 2024 and sell it today you would lose (43.00) from holding Coloplast A or give up 3.93% of portfolio value over 90 days.

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

Sharps Technology  vs.  Coloplast A

Sharps Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sharps Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm 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 fairly strong fundamental drivers, Coloplast is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sharps Technology and Coloplast

The main advantage of trading using opposite Sharps Technology and Coloplast positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sharps Technology 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 Sharps Technology 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.