Correlation Between Lifecare and Observe Medical
Can any of the company-specific risk be diversified away by investing in both Lifecare and Observe 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 Lifecare and Observe Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lifecare AS and Observe Medical Asa, you can compare the effects of market volatilities on Lifecare and Observe 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 Lifecare with a short position of Observe Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifecare and Observe Medical.
Diversification Opportunities for Lifecare and Observe Medical
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lifecare and Observe is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Lifecare AS and Observe Medical Asa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Observe Medical 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 Observe Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Observe Medical Asa has no effect on the direction of Lifecare i.e., Lifecare and Observe Medical go up and down completely randomly.
Pair Corralation between Lifecare and Observe Medical
Assuming the 90 days trading horizon Lifecare AS is expected to generate 0.84 times more return on investment than Observe Medical. However, Lifecare AS is 1.19 times less risky than Observe Medical. It trades about 0.01 of its potential returns per unit of risk. Observe Medical Asa is currently generating about -0.02 per unit of risk. If you would invest 2,088 in Lifecare AS on September 5, 2024 and sell it today you would lose (723.00) from holding Lifecare AS or give up 34.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lifecare AS vs. Observe Medical Asa
Performance |
| Timeline |
| Lifecare AS |
| Observe Medical Asa |
Lifecare and Observe Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lifecare and Observe Medical
The main advantage of trading using opposite Lifecare and Observe Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifecare position performs unexpectedly, Observe 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 Observe Medical will offset losses from the drop in Observe Medical's long position.| Lifecare vs. Bergenbio ASA | Lifecare vs. SoftOx Solutions AS | Lifecare vs. Aega ASA | Lifecare vs. Saga Pure ASA |
| Observe Medical vs. Sparebank 1 SR | Observe Medical vs. Veidekke ASA | Observe Medical vs. Sogn Sparebank | Observe Medical vs. Romsdal Sparebank |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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