Correlation Between AddLife AB and MedCap AB
Can any of the company-specific risk be diversified away by investing in both AddLife AB and MedCap AB 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 AddLife AB and MedCap AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AddLife AB and MedCap AB, you can compare the effects of market volatilities on AddLife AB and MedCap AB 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 AddLife AB with a short position of MedCap AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of AddLife AB and MedCap AB.
Diversification Opportunities for AddLife AB and MedCap AB
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between AddLife and MedCap is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding AddLife AB and MedCap AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MedCap AB and AddLife AB 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 AddLife AB are associated (or correlated) with MedCap AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MedCap AB has no effect on the direction of AddLife AB i.e., AddLife AB and MedCap AB go up and down completely randomly.
Pair Corralation between AddLife AB and MedCap AB
Assuming the 90 days trading horizon AddLife AB is expected to under-perform the MedCap AB. But the stock apears to be less risky and, when comparing its historical volatility, AddLife AB is 1.21 times less risky than MedCap AB. The stock trades about -0.2 of its potential returns per unit of risk. The MedCap AB is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 48,600 in MedCap AB on September 3, 2024 and sell it today you would earn a total of 6,500 from holding MedCap AB or generate 13.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AddLife AB vs. MedCap AB
Performance |
| Timeline |
| AddLife AB |
| MedCap AB |
AddLife AB and MedCap AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AddLife AB and MedCap AB
The main advantage of trading using opposite AddLife AB and MedCap AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AddLife AB position performs unexpectedly, MedCap AB 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 MedCap AB will offset losses from the drop in MedCap AB's long position.| AddLife AB vs. Addtech AB | AddLife AB vs. Lifco AB | AddLife AB vs. Indutrade AB | AddLife AB vs. Lagercrantz Group AB |
| MedCap AB vs. Biotage AB | MedCap AB vs. Invisio Communications AB | MedCap AB vs. Vitrolife AB | MedCap AB vs. AddLife AB |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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