Correlation Between OMX Copenhagen and Matas AS

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

By analyzing existing cross correlation between OMX Copenhagen All and Matas AS, you can compare the effects of market volatilities on OMX Copenhagen and Matas AS 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 OMX Copenhagen with a short position of Matas AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of OMX Copenhagen and Matas AS.

Diversification Opportunities for OMX Copenhagen and Matas AS

0.22

Correlation Coefficient

OMX Copenhagen  Matas AS

Modest diversification

The 3 months correlation between OMX and Matas is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding OMX Copenhagen All and Matas AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matas AS and OMX Copenhagen 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 OMX Copenhagen All are associated (or correlated) with Matas AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matas AS has no effect on the direction of OMX Copenhagen i.e., OMX Copenhagen and Matas AS go up and down completely randomly.

Pair Corralation between OMX Copenhagen and Matas AS

Assuming the 90 days trading horizon OMX Copenhagen All is expected to generate 0.76 times more return on investment than Matas AS. However, OMX Copenhagen All is 1.32 times less risky than Matas AS. It trades about 0.13 of its potential returns per unit of risk. Matas AS is currently generating about 0.02 per unit of risk. If you would invest  121,392  in OMX Copenhagen All on April 22, 2025 and sell it today you would earn a total of  12,156  from holding OMX Copenhagen All or generate 10.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

OMX Copenhagen All  vs.  Matas AS

Pair Trading with OMX Copenhagen and Matas AS

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

The idea behind OMX Copenhagen All and Matas 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.

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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.