Correlation Between Diamyd Medical and Superior Plus
Can any of the company-specific risk be diversified away by investing in both Diamyd Medical and Superior Plus 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 Diamyd Medical and Superior Plus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diamyd Medical AB and Superior Plus Corp, you can compare the effects of market volatilities on Diamyd Medical and Superior Plus 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 Diamyd Medical with a short position of Superior Plus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamyd Medical and Superior Plus.
Diversification Opportunities for Diamyd Medical and Superior Plus
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Diamyd and Superior is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Diamyd Medical AB and Superior Plus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Superior Plus Corp and Diamyd Medical 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 Diamyd Medical AB are associated (or correlated) with Superior Plus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Superior Plus Corp has no effect on the direction of Diamyd Medical i.e., Diamyd Medical and Superior Plus go up and down completely randomly.
Pair Corralation between Diamyd Medical and Superior Plus
Assuming the 90 days horizon Diamyd Medical AB is expected to under-perform the Superior Plus. But the stock apears to be less risky and, when comparing its historical volatility, Diamyd Medical AB is 1.46 times less risky than Superior Plus. The stock trades about -0.11 of its potential returns per unit of risk. The Superior Plus Corp is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 428.00 in Superior Plus Corp on August 29, 2024 and sell it today you would lose (18.00) from holding Superior Plus Corp or give up 4.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diamyd Medical AB vs. Superior Plus Corp
Performance |
| Timeline |
| Diamyd Medical AB |
| Superior Plus Corp |
Diamyd Medical and Superior Plus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamyd Medical and Superior Plus
The main advantage of trading using opposite Diamyd Medical and Superior Plus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamyd Medical position performs unexpectedly, Superior Plus 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 Superior Plus will offset losses from the drop in Superior Plus' long position.| Diamyd Medical vs. Superior Plus Corp | Diamyd Medical vs. NMI Holdings | Diamyd Medical vs. Origin Agritech | Diamyd Medical vs. SIVERS SEMICONDUCTORS AB |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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