Correlation Between Lifecare and Medistim ASA
Can any of the company-specific risk be diversified away by investing in both Lifecare and Medistim ASA 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 Lifecare and Medistim ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lifecare AS and Medistim ASA, you can compare the effects of market volatilities on Lifecare and Medistim ASA 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 Lifecare with a short position of Medistim ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifecare and Medistim ASA.
Diversification Opportunities for Lifecare and Medistim ASA
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lifecare and Medistim is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Lifecare AS and Medistim ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medistim ASA and Lifecare 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 Lifecare AS are associated (or correlated) with Medistim ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medistim ASA has no effect on the direction of Lifecare i.e., Lifecare and Medistim ASA go up and down completely randomly.
Pair Corralation between Lifecare and Medistim ASA
Assuming the 90 days trading horizon Lifecare AS is expected to under-perform the Medistim ASA. In addition to that, Lifecare is 1.68 times more volatile than Medistim ASA. It trades about -0.16 of its total potential returns per unit of risk. Medistim ASA is currently generating about -0.05 per unit of volatility. If you would invest 16,000 in Medistim ASA on September 1, 2024 and sell it today you would lose (800.00) from holding Medistim ASA or give up 5.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Lifecare AS vs. Medistim ASA
Performance |
| Timeline |
| Lifecare AS |
| Medistim ASA |
Lifecare and Medistim ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lifecare and Medistim ASA
The main advantage of trading using opposite Lifecare and Medistim ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifecare position performs unexpectedly, Medistim ASA 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 Medistim ASA will offset losses from the drop in Medistim ASA's long position.| Lifecare vs. Bergenbio ASA | Lifecare vs. SoftOx Solutions AS | Lifecare vs. Aega ASA | Lifecare vs. Saga Pure ASA |
| Medistim ASA vs. Lifecare AS | Medistim ASA vs. Elkem ASA | Medistim ASA vs. Integrated Wind Solutions | Medistim ASA vs. Vow ASA |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |