Correlation Between Genmab AS and Wirtek AS

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

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

Diversification Opportunities for Genmab AS and Wirtek AS

0.17

Correlation Coefficient

Genmab AS  Wirtek AS

Average diversification

The 3 months correlation between Genmab and Wirtek is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Genmab AS and Wirtek AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wirtek AS and Genmab AS 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 Genmab AS are associated (or correlated) with Wirtek AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wirtek AS has no effect on the direction of Genmab AS i.e., Genmab AS and Wirtek AS go up and down completely randomly.

Pair Corralation between Genmab AS and Wirtek AS

Assuming the 90 days trading horizon Genmab AS is expected to generate 6.17 times less return on investment than Wirtek AS. But when comparing it to its historical volatility, Genmab AS is 1.45 times less risky than Wirtek AS. It trades about 0.01 of its potential returns per unit of risk. Wirtek AS is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  934.00  in Wirtek AS on February 29, 2024 and sell it today you would earn a total of  60.00  from holding Wirtek AS or generate 6.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

Genmab AS  vs.  Wirtek AS

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 very healthy basic indicators, Genmab AS is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Wirtek AS

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Wirtek AS are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady technical and fundamental indicators, Wirtek AS may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Genmab AS and Wirtek AS

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

The idea behind Genmab AS and Wirtek 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.