Correlation Between Coloplast A/S and AddLife AB

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

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

Diversification Opportunities for Coloplast A/S and AddLife AB

-0.74

Correlation Coefficient

Coloplast A/S  AddLife AB

Pay attention - limited upside

The 3 months correlation between Coloplast and AddLife is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Coloplast AS and AddLife AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AddLife AB and Coloplast A/S 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 Coloplast AS are associated (or correlated) with AddLife AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AddLife AB has no effect on the direction of Coloplast A/S i.e., Coloplast A/S and AddLife AB go up and down completely randomly.

Pair Corralation between Coloplast A/S and AddLife AB

Assuming the 90 days trading horizon Coloplast AS is expected to under-perform the AddLife AB. In addition to that, Coloplast A/S is 1.05 times more volatile than AddLife AB. It trades about -0.09 of its total potential returns per unit of risk. AddLife AB is currently generating about 0.11 per unit of volatility. If you would invest  15,269  in AddLife AB on April 22, 2025 and sell it today you would earn a total of  1,891  from holding AddLife AB or generate 12.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.88%
Values	Daily Returns

Coloplast AS  vs.  AddLife AB

Coloplast A/S

Risk-Adjusted Performance

Very Weak

Over the last 90 days Coloplast AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's technical indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

AddLife AB

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AddLife AB are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, AddLife AB sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Coloplast A/S and AddLife AB

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

The idea behind Coloplast AS and AddLife AB 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.