Correlation Between Medistim ASA and Lifecare
Can any of the company-specific risk be diversified away by investing in both Medistim ASA and Lifecare 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 Medistim ASA and Lifecare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Medistim ASA and Lifecare AS, you can compare the effects of market volatilities on Medistim ASA and Lifecare 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 Medistim ASA with a short position of Lifecare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medistim ASA and Lifecare.
Diversification Opportunities for Medistim ASA and Lifecare
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Medistim and Lifecare is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Medistim ASA and Lifecare AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifecare AS and Medistim ASA 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 Medistim ASA are associated (or correlated) with Lifecare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifecare AS has no effect on the direction of Medistim ASA i.e., Medistim ASA and Lifecare go up and down completely randomly.
Pair Corralation between Medistim ASA and Lifecare
Assuming the 90 days trading horizon Medistim ASA is expected to generate 0.59 times more return on investment than Lifecare. However, Medistim ASA is 1.7 times less risky than Lifecare. It trades about -0.08 of its potential returns per unit of risk. Lifecare AS is currently generating about -0.17 per unit of risk. If you would invest 17,000 in Medistim ASA on August 28, 2024 and sell it today you would lose (1,100) from holding Medistim ASA or give up 6.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Medistim ASA vs. Lifecare AS
Performance |
| Timeline |
| Medistim ASA |
| Lifecare AS |
Medistim ASA and Lifecare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Medistim ASA and Lifecare
The main advantage of trading using opposite Medistim ASA and Lifecare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medistim ASA position performs unexpectedly, Lifecare 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 Lifecare will offset losses from the drop in Lifecare's long position.| Medistim ASA vs. Kitron ASA | Medistim ASA vs. Photocure | Medistim ASA vs. AF Gruppen ASA | Medistim ASA vs. Borregaard ASA |
| Lifecare vs. Bergenbio ASA | Lifecare vs. SoftOx Solutions AS | Lifecare vs. Aega ASA | Lifecare vs. Saga Pure ASA |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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