Correlation Between Coloplast A/S and QUALCOMM Incorporated

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

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

Diversification Opportunities for Coloplast A/S and QUALCOMM Incorporated

-0.61

Correlation Coefficient

Coloplast A/S  QUALCOMM Incorporated

Excellent diversification

The 3 months correlation between Coloplast and QUALCOMM is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Coloplast AS and QUALCOMM Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QUALCOMM Incorporated 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 QUALCOMM Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QUALCOMM Incorporated has no effect on the direction of Coloplast A/S i.e., Coloplast A/S and QUALCOMM Incorporated go up and down completely randomly.

Pair Corralation between Coloplast A/S and QUALCOMM Incorporated

Assuming the 90 days trading horizon Coloplast AS is expected to under-perform the QUALCOMM Incorporated. In addition to that, Coloplast A/S is 1.13 times more volatile than QUALCOMM Incorporated. It trades about -0.11 of its total potential returns per unit of risk. QUALCOMM Incorporated is currently generating about 0.11 per unit of volatility. If you would invest  11,890  in QUALCOMM Incorporated on April 22, 2025 and sell it today you would earn a total of  1,310  from holding QUALCOMM Incorporated or generate 11.02% 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.  QUALCOMM Incorporated

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 uncertain 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.

QUALCOMM Incorporated

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in QUALCOMM Incorporated are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, QUALCOMM Incorporated may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Coloplast A/S and QUALCOMM Incorporated

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

The idea behind Coloplast AS and QUALCOMM Incorporated 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.