Correlation Between Groupon and Orphazyme

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

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

Diversification Opportunities for Groupon and Orphazyme

0.25

Correlation Coefficient

Groupon  Orphazyme

Modest diversification

The 3 months correlation between Groupon and Orphazyme is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Groupon and Orphazyme AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orphazyme AS and Groupon 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 Groupon are associated (or correlated) with Orphazyme. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orphazyme AS has no effect on the direction of Groupon i.e., Groupon and Orphazyme go up and down completely randomly.

Pair Corralation between Groupon and Orphazyme

Given the investment horizon of 90 days Groupon is expected to generate 0.96 times more return on investment than Orphazyme. However, Groupon is 1.04 times less risky than Orphazyme. It trades about 0.07 of its potential returns per unit of risk. Orphazyme AS is currently generating about 0.01 per unit of risk. If you would invest  661.00  in Groupon on January 18, 2024 and sell it today you would earn a total of  316.00  from holding Groupon or generate 47.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.47%
Values	Daily Returns

Groupon  vs.  Orphazyme AS

Groupon

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Groupon has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Groupon is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Orphazyme AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orphazyme AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in May 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Groupon and Orphazyme

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

The idea behind Groupon and Orphazyme 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.