Correlation Between Mekonomen and Clinical Laserthermia
Can any of the company-specific risk be diversified away by investing in both Mekonomen and Clinical Laserthermia 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 Mekonomen and Clinical Laserthermia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mekonomen AB and Clinical Laserthermia Systems, you can compare the effects of market volatilities on Mekonomen and Clinical Laserthermia 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 Mekonomen with a short position of Clinical Laserthermia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mekonomen and Clinical Laserthermia.
Diversification Opportunities for Mekonomen and Clinical Laserthermia
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mekonomen and Clinical is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Mekonomen AB and Clinical Laserthermia Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clinical Laserthermia and Mekonomen 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 Mekonomen AB are associated (or correlated) with Clinical Laserthermia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clinical Laserthermia has no effect on the direction of Mekonomen i.e., Mekonomen and Clinical Laserthermia go up and down completely randomly.
Pair Corralation between Mekonomen and Clinical Laserthermia
Assuming the 90 days trading horizon Mekonomen AB is expected to generate 0.2 times more return on investment than Clinical Laserthermia. However, Mekonomen AB is 5.07 times less risky than Clinical Laserthermia. It trades about 0.02 of its potential returns per unit of risk. Clinical Laserthermia Systems is currently generating about -0.01 per unit of risk. If you would invest 11,312 in Mekonomen AB on October 30, 2024 and sell it today you would earn a total of 1,508 from holding Mekonomen AB or generate 13.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Mekonomen AB vs. Clinical Laserthermia Systems
Performance |
| Timeline |
| Mekonomen AB |
| Clinical Laserthermia |
Mekonomen and Clinical Laserthermia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mekonomen and Clinical Laserthermia
The main advantage of trading using opposite Mekonomen and Clinical Laserthermia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mekonomen position performs unexpectedly, Clinical Laserthermia 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 Clinical Laserthermia will offset losses from the drop in Clinical Laserthermia's long position.| Mekonomen vs. Clas Ohlson AB | Mekonomen vs. Bilia AB | Mekonomen vs. Byggmax Group AB | Mekonomen vs. Peab AB |
| Clinical Laserthermia vs. Cantargia AB | Clinical Laserthermia vs. Episurf Medical AB | Clinical Laserthermia vs. Karolinska Development AB | Clinical Laserthermia vs. Acarix AS |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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