Correlation Between GN Store and Genmab AS

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

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

Diversification Opportunities for GN Store and Genmab AS

0.86

Correlation Coefficient

GN Store  Genmab AS

Very poor diversification

The 3 months correlation between GN Store and Genmab is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding GN Store Nord and Genmab AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genmab AS and GN Store 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 GN Store Nord are associated (or correlated) with Genmab AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genmab AS has no effect on the direction of GN Store i.e., GN Store and Genmab AS go up and down completely randomly.

Pair Corralation between GN Store and Genmab AS

Assuming the 90 days horizon GN Store Nord is expected to under-perform the Genmab AS. In addition to that, GN Store is 1.36 times more volatile than Genmab AS. It trades about -0.16 of its total potential returns per unit of risk. Genmab AS is currently generating about -0.19 per unit of volatility. If you would invest  186,650  in Genmab AS on September 4, 2024 and sell it today you would lose (33,500) from holding Genmab AS or give up 17.95% of portfolio value over 90 days.

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

GN Store Nord  vs.  Genmab AS

GN Store Nord

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GN Store Nord has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Genmab AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genmab AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with GN Store and Genmab AS

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

The idea behind GN Store Nord and Genmab 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.