Correlation Between Medy Tox and Green Cross
Can any of the company-specific risk be diversified away by investing in both Medy Tox and Green Cross 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 Medy Tox and Green Cross into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Medy Tox and Green Cross Medical, you can compare the effects of market volatilities on Medy Tox and Green Cross 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 Medy Tox with a short position of Green Cross. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medy Tox and Green Cross.
Diversification Opportunities for Medy Tox and Green Cross
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Medy and Green is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Medy Tox and Green Cross Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Cross Medical and Medy Tox 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 Medy Tox are associated (or correlated) with Green Cross. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Cross Medical has no effect on the direction of Medy Tox i.e., Medy Tox and Green Cross go up and down completely randomly.
Pair Corralation between Medy Tox and Green Cross
Assuming the 90 days trading horizon Medy Tox is expected to under-perform the Green Cross. In addition to that, Medy Tox is 1.53 times more volatile than Green Cross Medical. It trades about -0.23 of its total potential returns per unit of risk. Green Cross Medical is currently generating about -0.1 per unit of volatility. If you would invest 415,000 in Green Cross Medical on August 28, 2024 and sell it today you would lose (42,500) from holding Green Cross Medical or give up 10.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Medy Tox vs. Green Cross Medical
Performance |
| Timeline |
| Medy Tox |
| Green Cross Medical |
Medy Tox and Green Cross Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Medy Tox and Green Cross
The main advantage of trading using opposite Medy Tox and Green Cross positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medy Tox position performs unexpectedly, Green Cross 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 Green Cross will offset losses from the drop in Green Cross' long position.| Medy Tox vs. Busan Industrial Co | Medy Tox vs. Busan Ind | Medy Tox vs. Mirae Asset Daewoo | Medy Tox vs. UNISEM Co |
| Green Cross vs. Cots Technology Co | Green Cross vs. Solution Advanced Technology | Green Cross vs. Eagle Veterinary Technology | Green Cross vs. NewFlex Technology Co |
Check out your portfolio center.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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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