Correlation Between OBSERVE MEDICAL and CREO MEDICAL
Can any of the company-specific risk be diversified away by investing in both OBSERVE MEDICAL and CREO MEDICAL 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 CREO MEDICAL 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 CREO MEDICAL GRP, you can compare the effects of market volatilities on OBSERVE MEDICAL and CREO MEDICAL 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 CREO MEDICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of OBSERVE MEDICAL and CREO MEDICAL.
Diversification Opportunities for OBSERVE MEDICAL and CREO MEDICAL
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between OBSERVE and CREO is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding OBSERVE MEDICAL ASA and CREO MEDICAL GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CREO MEDICAL GRP 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 CREO MEDICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CREO MEDICAL GRP has no effect on the direction of OBSERVE MEDICAL i.e., OBSERVE MEDICAL and CREO MEDICAL go up and down completely randomly.
Pair Corralation between OBSERVE MEDICAL and CREO MEDICAL
Assuming the 90 days trading horizon OBSERVE MEDICAL ASA is expected to generate 5.57 times more return on investment than CREO MEDICAL. However, OBSERVE MEDICAL is 5.57 times more volatile than CREO MEDICAL GRP. It trades about 0.05 of its potential returns per unit of risk. CREO MEDICAL GRP is currently generating about -0.06 per unit of risk. If you would invest 41.00 in OBSERVE MEDICAL ASA on October 29, 2024 and sell it today you would lose (5.00) from holding OBSERVE MEDICAL ASA or give up 12.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
OBSERVE MEDICAL ASA vs. CREO MEDICAL GRP
Performance |
| Timeline |
| OBSERVE MEDICAL ASA |
| CREO MEDICAL GRP |
OBSERVE MEDICAL and CREO MEDICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OBSERVE MEDICAL and CREO MEDICAL
The main advantage of trading using opposite OBSERVE MEDICAL and CREO MEDICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OBSERVE MEDICAL position performs unexpectedly, CREO MEDICAL 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 CREO MEDICAL will offset losses from the drop in CREO MEDICAL's long position.| OBSERVE MEDICAL vs. Abbott Laboratories | OBSERVE MEDICAL vs. Abbott Laboratories | OBSERVE MEDICAL vs. Medtronic PLC | OBSERVE MEDICAL vs. Stryker |
| CREO MEDICAL vs. Apple Inc | CREO MEDICAL vs. Apple Inc | CREO MEDICAL vs. Apple Inc | CREO MEDICAL vs. Apple Inc |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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