Correlation Between Coloplast and Advanced Micro

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

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

Diversification Opportunities for Coloplast and Advanced Micro

-0.6

Correlation Coefficient

Coloplast  Advanced Micro

Excellent diversification

The 3 months correlation between Coloplast and Advanced is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Coloplast AS and Advanced Micro Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Micro Devices and Coloplast 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 Advanced Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Micro Devices has no effect on the direction of Coloplast i.e., Coloplast and Advanced Micro go up and down completely randomly.

Pair Corralation between Coloplast and Advanced Micro

Assuming the 90 days trading horizon Coloplast AS is expected to under-perform the Advanced Micro. But the stock apears to be less risky and, when comparing its historical volatility, Coloplast AS is 1.57 times less risky than Advanced Micro. The stock trades about -0.08 of its potential returns per unit of risk. The Advanced Micro Devices is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  8,877  in Advanced Micro Devices on May 5, 2025 and sell it today you would earn a total of  5,959  from holding Advanced Micro Devices or generate 67.13% 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.  Advanced Micro Devices

Coloplast AS

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 latest unsteady performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Advanced Micro Devices

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Micro Devices are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile fundamental indicators, Advanced Micro unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Coloplast and Advanced Micro

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

The idea behind Coloplast AS and Advanced Micro Devices 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.