Correlation Between Medicofarma Biotech and M Food
Can any of the company-specific risk be diversified away by investing in both Medicofarma Biotech and M Food 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 M Food 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 M Food SA, you can compare the effects of market volatilities on Medicofarma Biotech and M Food 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 M Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medicofarma Biotech and M Food.
Diversification Opportunities for Medicofarma Biotech and M Food
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Medicofarma and MFD is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Medicofarma Biotech SA and M Food SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on M Food SA 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 M Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of M Food SA has no effect on the direction of Medicofarma Biotech i.e., Medicofarma Biotech and M Food go up and down completely randomly.
Pair Corralation between Medicofarma Biotech and M Food
Assuming the 90 days trading horizon Medicofarma Biotech SA is expected to under-perform the M Food. In addition to that, Medicofarma Biotech is 2.64 times more volatile than M Food SA. It trades about -0.19 of its total potential returns per unit of risk. M Food SA is currently generating about -0.12 per unit of volatility. If you would invest 116.00 in M Food SA on September 3, 2024 and sell it today you would lose (3.00) from holding M Food SA or give up 2.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 52.63% |
| Values | Daily Returns |
Medicofarma Biotech SA vs. M Food SA
Performance |
| Timeline |
| Medicofarma Biotech |
| M Food SA |
Medicofarma Biotech and M Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Medicofarma Biotech and M Food
The main advantage of trading using opposite Medicofarma Biotech and M Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medicofarma Biotech position performs unexpectedly, M Food 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 M Food will offset losses from the drop in M Food's long position.| Medicofarma Biotech vs. Clean Carbon Energy | Medicofarma Biotech vs. ADX | Medicofarma Biotech vs. Agroliga Group PLC | Medicofarma Biotech vs. Vee SA |
| M Food vs. Asseco Business Solutions | M Food vs. Kogeneracja SA | M Food vs. Asseco South Eastern | M Food vs. Movie Games SA |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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