Correlation Between Diamyd Medical and Microchip Technology
Can any of the company-specific risk be diversified away by investing in both Diamyd Medical and Microchip Technology 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 Microchip Technology 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 Microchip Technology Incorporated, you can compare the effects of market volatilities on Diamyd Medical and Microchip Technology 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 Microchip Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamyd Medical and Microchip Technology.
Diversification Opportunities for Diamyd Medical and Microchip Technology
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Diamyd and Microchip is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Diamyd Medical AB and Microchip Technology Incorpora in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microchip Technology 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 Microchip Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microchip Technology has no effect on the direction of Diamyd Medical i.e., Diamyd Medical and Microchip Technology go up and down completely randomly.
Pair Corralation between Diamyd Medical and Microchip Technology
Assuming the 90 days horizon Diamyd Medical AB is expected to generate 2.34 times more return on investment than Microchip Technology. However, Diamyd Medical is 2.34 times more volatile than Microchip Technology Incorporated. It trades about 0.03 of its potential returns per unit of risk. Microchip Technology Incorporated is currently generating about -0.02 per unit of risk. If you would invest 136.00 in Diamyd Medical AB on September 26, 2024 and sell it today you would lose (1.00) from holding Diamyd Medical AB or give up 0.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diamyd Medical AB vs. Microchip Technology Incorpora
Performance |
| Timeline |
| Diamyd Medical AB |
| Microchip Technology |
Diamyd Medical and Microchip Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamyd Medical and Microchip Technology
The main advantage of trading using opposite Diamyd Medical and Microchip Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamyd Medical position performs unexpectedly, Microchip Technology 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 Microchip Technology will offset losses from the drop in Microchip Technology's long position.| Diamyd Medical vs. Novo Nordisk AS | Diamyd Medical vs. Mercedes Benz Group AG | Diamyd Medical vs. Moderna | Diamyd Medical vs. WUXI BIOLOGICS UNSPADR2 |
| Microchip Technology vs. Platinum Investment Management | Microchip Technology vs. Diamyd Medical AB | Microchip Technology vs. Waste Management | Microchip Technology vs. NetSol Technologies |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |