Correlation Between Getinge AB and Redsense Medical
Can any of the company-specific risk be diversified away by investing in both Getinge AB 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 Getinge AB and Redsense Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Getinge AB ser and Redsense Medical AB, you can compare the effects of market volatilities on Getinge AB 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 Getinge AB with a short position of Redsense Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Getinge AB and Redsense Medical.
Diversification Opportunities for Getinge AB and Redsense Medical
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Getinge and Redsense is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Getinge AB ser and Redsense Medical AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Redsense Medical and Getinge AB 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 Getinge AB ser 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 Getinge AB i.e., Getinge AB and Redsense Medical go up and down completely randomly.
Pair Corralation between Getinge AB and Redsense Medical
Assuming the 90 days trading horizon Getinge AB ser is expected to under-perform the Redsense Medical. But the stock apears to be less risky and, when comparing its historical volatility, Getinge AB ser is 2.76 times less risky than Redsense Medical. The stock trades about -0.2 of its potential returns per unit of risk. The Redsense Medical AB is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 720.00 in Redsense Medical AB on September 2, 2024 and sell it today you would lose (10.00) from holding Redsense Medical AB or give up 1.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Getinge AB ser vs. Redsense Medical AB
Performance |
| Timeline |
| Getinge AB ser |
| Redsense Medical |
Getinge AB and Redsense Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Getinge AB and Redsense Medical
The main advantage of trading using opposite Getinge AB and Redsense Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Getinge AB 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.The idea behind Getinge AB ser and Redsense Medical AB pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Redsense Medical vs. Soder Sportfiske AB | Redsense Medical vs. Kinnevik Investment AB | Redsense Medical vs. G5 Entertainment publ | Redsense Medical vs. Havsfrun Investment 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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