Correlation Between Diamyd Medical and Firefly AB
Can any of the company-specific risk be diversified away by investing in both Diamyd Medical and Firefly 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 Diamyd Medical and Firefly AB 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 Firefly AB, you can compare the effects of market volatilities on Diamyd Medical and Firefly 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 Diamyd Medical with a short position of Firefly AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamyd Medical and Firefly AB.
Diversification Opportunities for Diamyd Medical and Firefly AB
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Diamyd and Firefly is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Diamyd Medical AB and Firefly AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Firefly AB 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 Firefly AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Firefly AB has no effect on the direction of Diamyd Medical i.e., Diamyd Medical and Firefly AB go up and down completely randomly.
Pair Corralation between Diamyd Medical and Firefly AB
Assuming the 90 days trading horizon Diamyd Medical is expected to generate 2.83 times less return on investment than Firefly AB. In addition to that, Diamyd Medical is 2.14 times more volatile than Firefly AB. It trades about 0.01 of its total potential returns per unit of risk. Firefly AB is currently generating about 0.05 per unit of volatility. If you would invest 10,675 in Firefly AB on December 7, 2024 and sell it today you would earn a total of 6,475 from holding Firefly AB or generate 60.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diamyd Medical AB vs. Firefly AB
Performance |
| Timeline |
| Diamyd Medical AB |
| Firefly AB |
Diamyd Medical and Firefly AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamyd Medical and Firefly AB
The main advantage of trading using opposite Diamyd Medical and Firefly AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamyd Medical position performs unexpectedly, Firefly 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 Firefly AB will offset losses from the drop in Firefly AB's long position.| Diamyd Medical vs. Cantargia 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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