Correlation Between Diamyd Medical and Geratherm Medical
Can any of the company-specific risk be diversified away by investing in both Diamyd Medical and Geratherm Medical 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 Geratherm Medical 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 Geratherm Medical AG, you can compare the effects of market volatilities on Diamyd Medical and Geratherm Medical 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 Geratherm Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamyd Medical and Geratherm Medical.
Diversification Opportunities for Diamyd Medical and Geratherm Medical
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Diamyd and Geratherm is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Diamyd Medical AB and Geratherm Medical AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geratherm Medical 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 Geratherm Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geratherm Medical has no effect on the direction of Diamyd Medical i.e., Diamyd Medical and Geratherm Medical go up and down completely randomly.
Pair Corralation between Diamyd Medical and Geratherm Medical
Assuming the 90 days horizon Diamyd Medical is expected to generate 55.55 times less return on investment than Geratherm Medical. But when comparing it to its historical volatility, Diamyd Medical AB is 2.05 times less risky than Geratherm Medical. It trades about 0.01 of its potential returns per unit of risk. Geratherm Medical AG is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 326.00 in Geratherm Medical AG on August 31, 2024 and sell it today you would earn a total of 204.00 from holding Geratherm Medical AG or generate 62.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diamyd Medical AB vs. Geratherm Medical AG
Performance |
| Timeline |
| Diamyd Medical AB |
| Geratherm Medical |
Diamyd Medical and Geratherm Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamyd Medical and Geratherm Medical
The main advantage of trading using opposite Diamyd Medical and Geratherm Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamyd Medical position performs unexpectedly, Geratherm Medical 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 Geratherm Medical will offset losses from the drop in Geratherm Medical's long position.| Diamyd Medical vs. Moderna | Diamyd Medical vs. Superior Plus Corp | Diamyd Medical vs. NMI Holdings | Diamyd Medical vs. Origin Agritech |
| Geratherm Medical vs. Stryker | Geratherm Medical vs. Align Technology | Geratherm Medical vs. Insulet | Geratherm Medical vs. Superior Plus Corp |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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