Correlation Between ROCKWOOL International and ALK Abell

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

Diversification Opportunities for ROCKWOOL International and ALK Abell

0.02

Correlation Coefficient

ROCKWOOL International  ALK Abell

Significant diversification

The 3 months correlation between ROCKWOOL and ALK is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding ROCKWOOL International AS and ALK Abell AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALK Abell AS 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 ALK Abell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALK Abell AS has no effect on the direction of ROCKWOOL International i.e., ROCKWOOL International and ALK Abell go up and down completely randomly.

Pair Corralation between ROCKWOOL International and ALK Abell

Assuming the 90 days trading horizon ROCKWOOL International is expected to generate 17.65 times less return on investment than ALK Abell. In addition to that, ROCKWOOL International is 1.51 times more volatile than ALK Abell AS. It trades about 0.01 of its total potential returns per unit of risk. ALK Abell AS is currently generating about 0.36 per unit of volatility. If you would invest  14,680  in ALK Abell AS on April 25, 2025 and sell it today you would earn a total of  4,550  from holding ALK Abell AS or generate 30.99% return on investment over 90 days.

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

ROCKWOOL International AS  vs.  ALK Abell AS

ROCKWOOL International

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ROCKWOOL International AS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, ROCKWOOL International is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

ALK Abell AS

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in ALK Abell AS are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, ALK Abell exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ROCKWOOL International and ALK Abell

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

The idea behind ROCKWOOL International AS and ALK Abell 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.