Correlation Between Medical Developments and MA Financial
Can any of the company-specific risk be diversified away by investing in both Medical Developments and MA Financial 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 Medical Developments and MA Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Medical Developments International and MA Financial Group, you can compare the effects of market volatilities on Medical Developments and MA Financial 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 Medical Developments with a short position of MA Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medical Developments and MA Financial.
Diversification Opportunities for Medical Developments and MA Financial
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Medical and MAF is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Medical Developments Internati and MA Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MA Financial Group and Medical Developments 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 Medical Developments International are associated (or correlated) with MA Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MA Financial Group has no effect on the direction of Medical Developments i.e., Medical Developments and MA Financial go up and down completely randomly.
Pair Corralation between Medical Developments and MA Financial
Assuming the 90 days trading horizon Medical Developments International is expected to generate 5.83 times more return on investment than MA Financial. However, Medical Developments is 5.83 times more volatile than MA Financial Group. It trades about 0.23 of its potential returns per unit of risk. MA Financial Group is currently generating about 0.29 per unit of risk. If you would invest 43.00 in Medical Developments International on November 5, 2024 and sell it today you would earn a total of 24.00 from holding Medical Developments International or generate 55.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Medical Developments Internati vs. MA Financial Group
Performance |
| Timeline |
| Medical Developments |
| MA Financial Group |
Medical Developments and MA Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Medical Developments and MA Financial
The main advantage of trading using opposite Medical Developments and MA Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medical Developments position performs unexpectedly, MA Financial 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 MA Financial will offset losses from the drop in MA Financial's long position.| Medical Developments vs. Dug Technology | Medical Developments vs. Ras Technology Holdings | Medical Developments vs. Anteris Technologies | Medical Developments vs. Kip McGrath Education |
| MA Financial vs. M3 Mining | MA Financial vs. Retail Food Group | MA Financial vs. Aspire Mining | MA Financial vs. Beam Communications Holdings |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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