Correlation Between OBSERVE MEDICAL and VARIOUS EATERIES
Can any of the company-specific risk be diversified away by investing in both OBSERVE MEDICAL and VARIOUS EATERIES 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 VARIOUS EATERIES 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 VARIOUS EATERIES LS, you can compare the effects of market volatilities on OBSERVE MEDICAL and VARIOUS EATERIES 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 VARIOUS EATERIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of OBSERVE MEDICAL and VARIOUS EATERIES.
Diversification Opportunities for OBSERVE MEDICAL and VARIOUS EATERIES
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between OBSERVE and VARIOUS is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding OBSERVE MEDICAL ASA and VARIOUS EATERIES LS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VARIOUS EATERIES 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 VARIOUS EATERIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VARIOUS EATERIES has no effect on the direction of OBSERVE MEDICAL i.e., OBSERVE MEDICAL and VARIOUS EATERIES go up and down completely randomly.
Pair Corralation between OBSERVE MEDICAL and VARIOUS EATERIES
Assuming the 90 days trading horizon OBSERVE MEDICAL ASA is expected to generate 15.11 times more return on investment than VARIOUS EATERIES. However, OBSERVE MEDICAL is 15.11 times more volatile than VARIOUS EATERIES LS. It trades about 0.07 of its potential returns per unit of risk. VARIOUS EATERIES LS is currently generating about -0.05 per unit of risk. If you would invest 19.00 in OBSERVE MEDICAL ASA on October 14, 2024 and sell it today you would lose (16.22) from holding OBSERVE MEDICAL ASA or give up 85.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
OBSERVE MEDICAL ASA vs. VARIOUS EATERIES LS
Performance |
| Timeline |
| OBSERVE MEDICAL ASA |
| VARIOUS EATERIES |
OBSERVE MEDICAL and VARIOUS EATERIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OBSERVE MEDICAL and VARIOUS EATERIES
The main advantage of trading using opposite OBSERVE MEDICAL and VARIOUS EATERIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OBSERVE MEDICAL position performs unexpectedly, VARIOUS EATERIES 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 VARIOUS EATERIES will offset losses from the drop in VARIOUS EATERIES's long position.| OBSERVE MEDICAL vs. Harmony Gold Mining | OBSERVE MEDICAL vs. ADRIATIC METALS LS 013355 | OBSERVE MEDICAL vs. Jacquet Metal Service | OBSERVE MEDICAL vs. ARROW ELECTRONICS |
| VARIOUS EATERIES vs. SIEM OFFSHORE NEW | VARIOUS EATERIES vs. Eidesvik Offshore ASA | VARIOUS EATERIES vs. Clean Energy Fuels | VARIOUS EATERIES vs. Taiwan Semiconductor Manufacturing |
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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