Correlation Between Mendus AB and AroCell AB
Can any of the company-specific risk be diversified away by investing in both Mendus AB and AroCell 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 Mendus AB and AroCell AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mendus AB and AroCell AB, you can compare the effects of market volatilities on Mendus AB and AroCell 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 Mendus AB with a short position of AroCell AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mendus AB and AroCell AB.
Diversification Opportunities for Mendus AB and AroCell AB
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mendus and AroCell is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Mendus AB and AroCell AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AroCell AB and Mendus 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 Mendus AB are associated (or correlated) with AroCell AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AroCell AB has no effect on the direction of Mendus AB i.e., Mendus AB and AroCell AB go up and down completely randomly.
Pair Corralation between Mendus AB and AroCell AB
Assuming the 90 days trading horizon Mendus AB is expected to under-perform the AroCell AB. But the stock apears to be less risky and, when comparing its historical volatility, Mendus AB is 1.71 times less risky than AroCell AB. The stock trades about -0.12 of its potential returns per unit of risk. The AroCell AB is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 43.00 in AroCell AB on September 14, 2024 and sell it today you would lose (2.00) from holding AroCell AB or give up 4.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mendus AB vs. AroCell AB
Performance |
| Timeline |
| Mendus AB |
| AroCell AB |
Mendus AB and AroCell AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mendus AB and AroCell AB
The main advantage of trading using opposite Mendus AB and AroCell AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mendus AB position performs unexpectedly, AroCell 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 AroCell AB will offset losses from the drop in AroCell AB's long position.The idea behind Mendus AB and AroCell 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.| AroCell AB vs. Mendus AB | AroCell AB vs. Cantargia AB | AroCell AB vs. BioInvent International AB | AroCell AB vs. Isofol Medical 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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