Correlation Between Coloplast A/S and Nucor

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

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

Diversification Opportunities for Coloplast A/S and Nucor

-0.63

Correlation Coefficient

Coloplast A/S  Nucor

Excellent diversification

The 3 months correlation between Coloplast and Nucor is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Coloplast AS and Nucor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nucor 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 Nucor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nucor has no effect on the direction of Coloplast A/S i.e., Coloplast A/S and Nucor go up and down completely randomly.

Pair Corralation between Coloplast A/S and Nucor

Assuming the 90 days trading horizon Coloplast AS is expected to under-perform the Nucor. But the stock apears to be less risky and, when comparing its historical volatility, Coloplast AS is 1.37 times less risky than Nucor. The stock trades about -0.11 of its potential returns per unit of risk. The Nucor is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  9,088  in Nucor on April 21, 2025 and sell it today you would earn a total of  3,076  from holding Nucor or generate 33.85% return on investment over 90 days.

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

Coloplast AS  vs.  Nucor

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. In spite of fragile performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in August 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Nucor

Risk-Adjusted Performance

Good

Over the last 90 days Nucor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak basic indicators, Nucor reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Coloplast A/S and Nucor

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

The idea behind Coloplast AS and Nucor 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.