Correlation Between MeVis Medical and THRACE PLASTICS
Can any of the company-specific risk be diversified away by investing in both MeVis Medical and THRACE PLASTICS 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 THRACE PLASTICS 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 THRACE PLASTICS, you can compare the effects of market volatilities on MeVis Medical and THRACE PLASTICS 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 THRACE PLASTICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of MeVis Medical and THRACE PLASTICS.
Diversification Opportunities for MeVis Medical and THRACE PLASTICS
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MeVis and THRACE is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding MeVis Medical Solutions and THRACE PLASTICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THRACE PLASTICS 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 THRACE PLASTICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THRACE PLASTICS has no effect on the direction of MeVis Medical i.e., MeVis Medical and THRACE PLASTICS go up and down completely randomly.
Pair Corralation between MeVis Medical and THRACE PLASTICS
Assuming the 90 days trading horizon MeVis Medical is expected to generate 2.76 times less return on investment than THRACE PLASTICS. But when comparing it to its historical volatility, MeVis Medical Solutions is 1.38 times less risky than THRACE PLASTICS. It trades about 0.07 of its potential returns per unit of risk. THRACE PLASTICS is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 358.00 in THRACE PLASTICS on November 1, 2024 and sell it today you would earn a total of 43.00 from holding THRACE PLASTICS or generate 12.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.33% |
| Values | Daily Returns |
MeVis Medical Solutions vs. THRACE PLASTICS
Performance |
| Timeline |
| MeVis Medical Solutions |
| THRACE PLASTICS |
MeVis Medical and THRACE PLASTICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MeVis Medical and THRACE PLASTICS
The main advantage of trading using opposite MeVis Medical and THRACE PLASTICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MeVis Medical position performs unexpectedly, THRACE PLASTICS 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 THRACE PLASTICS will offset losses from the drop in THRACE PLASTICS's long position.| MeVis Medical vs. JIAHUA STORES | MeVis Medical vs. OFFICE DEPOT | MeVis Medical vs. GOME Retail Holdings | MeVis Medical vs. Burlington Stores |
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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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