Correlation Between ROCKWOOL International and Copenhagen Airports

Can any of the company-specific risk be diversified away by investing in both ROCKWOOL International and Copenhagen Airports 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 Copenhagen Airports 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 Copenhagen Airports AS, you can compare the effects of market volatilities on ROCKWOOL International and Copenhagen Airports 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 Copenhagen Airports. Check out your portfolio center. Please also check ongoing floating volatility patterns of ROCKWOOL International and Copenhagen Airports.

Diversification Opportunities for ROCKWOOL International and Copenhagen Airports

-0.71

Correlation Coefficient

ROCKWOOL International  Copenhagen Airports

Pay attention - limited upside

The 3 months correlation between ROCKWOOL and Copenhagen is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding ROCKWOOL International AS and Copenhagen Airports AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Copenhagen Airports 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 Copenhagen Airports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Copenhagen Airports has no effect on the direction of ROCKWOOL International i.e., ROCKWOOL International and Copenhagen Airports go up and down completely randomly.

Pair Corralation between ROCKWOOL International and Copenhagen Airports

Assuming the 90 days trading horizon ROCKWOOL International AS is expected to under-perform the Copenhagen Airports. But the stock apears to be less risky and, when comparing its historical volatility, ROCKWOOL International AS is 3.61 times less risky than Copenhagen Airports. The stock trades about -0.07 of its potential returns per unit of risk. The Copenhagen Airports AS is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  412,000  in Copenhagen Airports AS on September 14, 2024 and sell it today you would earn a total of  200,000  from holding Copenhagen Airports AS or generate 48.54% return on investment over 90 days.

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

ROCKWOOL International AS  vs.  Copenhagen Airports AS

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 latest unfluctuating performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Copenhagen Airports

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Copenhagen Airports AS are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Copenhagen Airports displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ROCKWOOL International and Copenhagen Airports

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

The idea behind ROCKWOOL International AS and Copenhagen Airports 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.