Correlation Between MeVis Medical and KAUFMAN ET
Can any of the company-specific risk be diversified away by investing in both MeVis Medical and KAUFMAN ET 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 MeVis Medical and KAUFMAN ET into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MeVis Medical Solutions and KAUFMAN ET BROAD, you can compare the effects of market volatilities on MeVis Medical and KAUFMAN ET 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 MeVis Medical with a short position of KAUFMAN ET. Check out your portfolio center. Please also check ongoing floating volatility patterns of MeVis Medical and KAUFMAN ET.
Diversification Opportunities for MeVis Medical and KAUFMAN ET
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MeVis and KAUFMAN is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding MeVis Medical Solutions and KAUFMAN ET BROAD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KAUFMAN ET BROAD and MeVis Medical 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 MeVis Medical Solutions are associated (or correlated) with KAUFMAN ET. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KAUFMAN ET BROAD has no effect on the direction of MeVis Medical i.e., MeVis Medical and KAUFMAN ET go up and down completely randomly.
Pair Corralation between MeVis Medical and KAUFMAN ET
Assuming the 90 days trading horizon MeVis Medical is expected to generate 1.55 times less return on investment than KAUFMAN ET. But when comparing it to its historical volatility, MeVis Medical Solutions is 1.5 times less risky than KAUFMAN ET. It trades about 0.03 of its potential returns per unit of risk. KAUFMAN ET BROAD is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,714 in KAUFMAN ET BROAD on September 5, 2024 and sell it today you would earn a total of 286.00 from holding KAUFMAN ET BROAD or generate 10.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MeVis Medical Solutions vs. KAUFMAN ET BROAD
Performance |
| Timeline |
| MeVis Medical Solutions |
| KAUFMAN ET BROAD |
MeVis Medical and KAUFMAN ET Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MeVis Medical and KAUFMAN ET
The main advantage of trading using opposite MeVis Medical and KAUFMAN ET positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MeVis Medical position performs unexpectedly, KAUFMAN ET 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 KAUFMAN ET will offset losses from the drop in KAUFMAN ET's long position.| MeVis Medical vs. Universal Display | MeVis Medical vs. Collins Foods Limited | MeVis Medical vs. Playtech plc | MeVis Medical vs. Columbia Sportswear |
| KAUFMAN ET vs. TOTAL GABON | KAUFMAN ET vs. Walgreens Boots Alliance | KAUFMAN ET vs. Peak Resources Limited |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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