Correlation Between Diamyd Medical and Insteel Industries
Can any of the company-specific risk be diversified away by investing in both Diamyd Medical and Insteel Industries 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 Insteel Industries 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 Insteel Industries, you can compare the effects of market volatilities on Diamyd Medical and Insteel Industries 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 Insteel Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamyd Medical and Insteel Industries.
Diversification Opportunities for Diamyd Medical and Insteel Industries
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Diamyd and Insteel is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Diamyd Medical AB and Insteel Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insteel Industries 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 Insteel Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insteel Industries has no effect on the direction of Diamyd Medical i.e., Diamyd Medical and Insteel Industries go up and down completely randomly.
Pair Corralation between Diamyd Medical and Insteel Industries
Assuming the 90 days horizon Diamyd Medical AB is expected to under-perform the Insteel Industries. In addition to that, Diamyd Medical is 1.33 times more volatile than Insteel Industries. It trades about -0.07 of its total potential returns per unit of risk. Insteel Industries is currently generating about 0.27 per unit of volatility. If you would invest 2,500 in Insteel Industries on November 5, 2024 and sell it today you would earn a total of 280.00 from holding Insteel Industries or generate 11.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diamyd Medical AB vs. Insteel Industries
Performance |
| Timeline |
| Diamyd Medical AB |
| Insteel Industries |
Diamyd Medical and Insteel Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamyd Medical and Insteel Industries
The main advantage of trading using opposite Diamyd Medical and Insteel Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamyd Medical position performs unexpectedly, Insteel Industries 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 Insteel Industries will offset losses from the drop in Insteel Industries' long position.| Diamyd Medical vs. UNIVERSAL DISPLAY | Diamyd Medical vs. Aristocrat Leisure Limited | Diamyd Medical vs. DISTRICT METALS | Diamyd Medical vs. Columbia Sportswear |
| Insteel Industries vs. CORNISH METALS INC | Insteel Industries vs. SEKISUI CHEMICAL | Insteel Industries vs. TRI CHEMICAL LABORATINC | Insteel Industries vs. Scandinavian Tobacco Group |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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