Correlation Between G5 Entertainment and Redsense Medical
Can any of the company-specific risk be diversified away by investing in both G5 Entertainment and Redsense 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 G5 Entertainment and Redsense Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between G5 Entertainment publ and Redsense Medical AB, you can compare the effects of market volatilities on G5 Entertainment and Redsense 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 G5 Entertainment with a short position of Redsense Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of G5 Entertainment and Redsense Medical.
Diversification Opportunities for G5 Entertainment and Redsense Medical
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between G5EN and Redsense is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding G5 Entertainment publ and Redsense Medical AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Redsense Medical and G5 Entertainment 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 G5 Entertainment publ are associated (or correlated) with Redsense Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Redsense Medical has no effect on the direction of G5 Entertainment i.e., G5 Entertainment and Redsense Medical go up and down completely randomly.
Pair Corralation between G5 Entertainment and Redsense Medical
Assuming the 90 days trading horizon G5 Entertainment publ is expected to under-perform the Redsense Medical. But the stock apears to be less risky and, when comparing its historical volatility, G5 Entertainment publ is 1.9 times less risky than Redsense Medical. The stock trades about -0.07 of its potential returns per unit of risk. The Redsense Medical AB is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 762.00 in Redsense Medical AB on September 3, 2024 and sell it today you would lose (54.00) from holding Redsense Medical AB or give up 7.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
G5 Entertainment publ vs. Redsense Medical AB
Performance |
| Timeline |
| G5 Entertainment publ |
| Redsense Medical |
G5 Entertainment and Redsense Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with G5 Entertainment and Redsense Medical
The main advantage of trading using opposite G5 Entertainment and Redsense Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G5 Entertainment position performs unexpectedly, Redsense 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 Redsense Medical will offset losses from the drop in Redsense Medical's long position.| G5 Entertainment vs. Stillfront Group AB | G5 Entertainment vs. Paradox Interactive AB | G5 Entertainment vs. Catena Media plc | G5 Entertainment vs. Betsson AB |
| Redsense Medical vs. Getinge AB ser | Redsense Medical vs. Elekta AB | Redsense Medical vs. AddLife AB | Redsense Medical vs. Biotage AB |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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