Correlation Between Medicofarma Biotech and ING Bank
Can any of the company-specific risk be diversified away by investing in both Medicofarma Biotech and ING Bank 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 Medicofarma Biotech and ING Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Medicofarma Biotech SA and ING Bank lski, you can compare the effects of market volatilities on Medicofarma Biotech and ING Bank 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 Medicofarma Biotech with a short position of ING Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medicofarma Biotech and ING Bank.
Diversification Opportunities for Medicofarma Biotech and ING Bank
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Medicofarma and ING is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Medicofarma Biotech SA and ING Bank lski in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ING Bank lski and Medicofarma Biotech 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 Medicofarma Biotech SA are associated (or correlated) with ING Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ING Bank lski has no effect on the direction of Medicofarma Biotech i.e., Medicofarma Biotech and ING Bank go up and down completely randomly.
Pair Corralation between Medicofarma Biotech and ING Bank
Assuming the 90 days trading horizon Medicofarma Biotech SA is expected to under-perform the ING Bank. In addition to that, Medicofarma Biotech is 2.73 times more volatile than ING Bank lski. It trades about -0.2 of its total potential returns per unit of risk. ING Bank lski is currently generating about -0.24 per unit of volatility. If you would invest 25,100 in ING Bank lski on August 30, 2024 and sell it today you would lose (2,400) from holding ING Bank lski or give up 9.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Medicofarma Biotech SA vs. ING Bank lski
Performance |
| Timeline |
| Medicofarma Biotech |
| ING Bank lski |
Medicofarma Biotech and ING Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Medicofarma Biotech and ING Bank
The main advantage of trading using opposite Medicofarma Biotech and ING Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medicofarma Biotech position performs unexpectedly, ING Bank 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 ING Bank will offset losses from the drop in ING Bank's long position.| Medicofarma Biotech vs. Clean Carbon Energy | Medicofarma Biotech vs. ADX | Medicofarma Biotech vs. Agroliga Group PLC | Medicofarma Biotech vs. Vee SA |
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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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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