Correlation Between SCANDMEDICAL SOLDK and Direct Line
Can any of the company-specific risk be diversified away by investing in both SCANDMEDICAL SOLDK and Direct Line 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 SCANDMEDICAL SOLDK and Direct Line into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SCANDMEDICAL SOLDK 040 and Direct Line Insurance, you can compare the effects of market volatilities on SCANDMEDICAL SOLDK and Direct Line 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 SCANDMEDICAL SOLDK with a short position of Direct Line. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCANDMEDICAL SOLDK and Direct Line.
Diversification Opportunities for SCANDMEDICAL SOLDK and Direct Line
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between SCANDMEDICAL and Direct is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding SCANDMEDICAL SOLDK 040 and Direct Line Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direct Line Insurance and SCANDMEDICAL SOLDK 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 SCANDMEDICAL SOLDK 040 are associated (or correlated) with Direct Line. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direct Line Insurance has no effect on the direction of SCANDMEDICAL SOLDK i.e., SCANDMEDICAL SOLDK and Direct Line go up and down completely randomly.
Pair Corralation between SCANDMEDICAL SOLDK and Direct Line
Assuming the 90 days horizon SCANDMEDICAL SOLDK 040 is expected to under-perform the Direct Line. But the stock apears to be less risky and, when comparing its historical volatility, SCANDMEDICAL SOLDK 040 is 2.29 times less risky than Direct Line. The stock trades about -0.07 of its potential returns per unit of risk. The Direct Line Insurance is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 195.00 in Direct Line Insurance on September 12, 2024 and sell it today you would earn a total of 107.00 from holding Direct Line Insurance or generate 54.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SCANDMEDICAL SOLDK 040 vs. Direct Line Insurance
Performance |
| Timeline |
| SCANDMEDICAL SOLDK 040 |
| Direct Line Insurance |
SCANDMEDICAL SOLDK and Direct Line Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SCANDMEDICAL SOLDK and Direct Line
The main advantage of trading using opposite SCANDMEDICAL SOLDK and Direct Line positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCANDMEDICAL SOLDK position performs unexpectedly, Direct Line 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 Direct Line will offset losses from the drop in Direct Line's long position.| SCANDMEDICAL SOLDK vs. Align Technology | SCANDMEDICAL SOLDK vs. Superior Plus Corp | SCANDMEDICAL SOLDK vs. SIVERS SEMICONDUCTORS AB | SCANDMEDICAL SOLDK vs. Norsk Hydro ASA |
| Direct Line vs. Superior Plus Corp | Direct Line vs. SIVERS SEMICONDUCTORS AB | Direct Line vs. CHINA HUARONG ENERHD 50 | Direct Line vs. NORDIC HALIBUT AS |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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