Correlation Between Observe Medical and Medistim ASA
Can any of the company-specific risk be diversified away by investing in both Observe Medical and Medistim ASA 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 Observe Medical and Medistim ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Observe Medical Asa and Medistim ASA, you can compare the effects of market volatilities on Observe Medical and Medistim ASA 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 Observe Medical with a short position of Medistim ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Observe Medical and Medistim ASA.
Diversification Opportunities for Observe Medical and Medistim ASA
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Observe and Medistim is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Observe Medical Asa and Medistim ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medistim ASA and Observe Medical 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 Observe Medical Asa are associated (or correlated) with Medistim ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medistim ASA has no effect on the direction of Observe Medical i.e., Observe Medical and Medistim ASA go up and down completely randomly.
Pair Corralation between Observe Medical and Medistim ASA
Assuming the 90 days trading horizon Observe Medical Asa is expected to generate 2.44 times more return on investment than Medistim ASA. However, Observe Medical is 2.44 times more volatile than Medistim ASA. It trades about 0.04 of its potential returns per unit of risk. Medistim ASA is currently generating about -0.05 per unit of risk. If you would invest 34.00 in Observe Medical Asa on September 3, 2024 and sell it today you would earn a total of 4.00 from holding Observe Medical Asa or generate 11.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Observe Medical Asa vs. Medistim ASA
Performance |
| Timeline |
| Observe Medical Asa |
| Medistim ASA |
Observe Medical and Medistim ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Observe Medical and Medistim ASA
The main advantage of trading using opposite Observe Medical and Medistim ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Observe Medical position performs unexpectedly, Medistim ASA 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 Medistim ASA will offset losses from the drop in Medistim ASA's long position.| Observe Medical vs. Polaris Media | Observe Medical vs. Aurskog Sparebank | Observe Medical vs. Romerike Sparebank | Observe Medical vs. Morrow Bank ASA |
| Medistim ASA vs. Kitron ASA | Medistim ASA vs. Photocure | Medistim ASA vs. AF Gruppen ASA | Medistim ASA vs. Borregaard 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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