Correlation Between Karolinska Development and Sedana Medical
Can any of the company-specific risk be diversified away by investing in both Karolinska Development and Sedana 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 Karolinska Development and Sedana Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Karolinska Development AB and Sedana Medical AB, you can compare the effects of market volatilities on Karolinska Development and Sedana 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 Karolinska Development with a short position of Sedana Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Karolinska Development and Sedana Medical.
Diversification Opportunities for Karolinska Development and Sedana Medical
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Karolinska and Sedana is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Karolinska Development AB and Sedana Medical AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sedana Medical AB and Karolinska Development 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 Karolinska Development AB are associated (or correlated) with Sedana Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sedana Medical AB has no effect on the direction of Karolinska Development i.e., Karolinska Development and Sedana Medical go up and down completely randomly.
Pair Corralation between Karolinska Development and Sedana Medical
Assuming the 90 days trading horizon Karolinska Development AB is expected to generate 0.64 times more return on investment than Sedana Medical. However, Karolinska Development AB is 1.56 times less risky than Sedana Medical. It trades about -0.08 of its potential returns per unit of risk. Sedana Medical AB is currently generating about -0.1 per unit of risk. If you would invest 154.00 in Karolinska Development AB on September 1, 2024 and sell it today you would lose (46.00) from holding Karolinska Development AB or give up 29.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.22% |
| Values | Daily Returns |
Karolinska Development AB vs. Sedana Medical AB
Performance |
| Timeline |
| Karolinska Development |
| Sedana Medical AB |
Karolinska Development and Sedana Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Karolinska Development and Sedana Medical
The main advantage of trading using opposite Karolinska Development and Sedana Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Karolinska Development position performs unexpectedly, Sedana 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 Sedana Medical will offset losses from the drop in Sedana Medical's long position.| Karolinska Development vs. Oncopeptides AB | Karolinska Development vs. Cantargia AB | Karolinska Development vs. BioInvent International AB | Karolinska Development vs. Moberg Pharma AB |
| Sedana Medical vs. Surgical Science Sweden | Sedana Medical vs. Bonesupport Holding AB | Sedana Medical vs. Swedencare publ AB | Sedana Medical vs. Oncopeptides 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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