Correlation Between OBSERVE MEDICAL and Safety Insurance
Can any of the company-specific risk be diversified away by investing in both OBSERVE MEDICAL and Safety Insurance 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 Safety Insurance 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 Safety Insurance Group, you can compare the effects of market volatilities on OBSERVE MEDICAL and Safety Insurance 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 Safety Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of OBSERVE MEDICAL and Safety Insurance.
Diversification Opportunities for OBSERVE MEDICAL and Safety Insurance
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between OBSERVE and Safety is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding OBSERVE MEDICAL ASA and Safety Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safety Insurance 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 Safety Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safety Insurance has no effect on the direction of OBSERVE MEDICAL i.e., OBSERVE MEDICAL and Safety Insurance go up and down completely randomly.
Pair Corralation between OBSERVE MEDICAL and Safety Insurance
Assuming the 90 days trading horizon OBSERVE MEDICAL ASA is expected to under-perform the Safety Insurance. In addition to that, OBSERVE MEDICAL is 18.67 times more volatile than Safety Insurance Group. It trades about -0.27 of its total potential returns per unit of risk. Safety Insurance Group is currently generating about -0.17 per unit of volatility. If you would invest 7,900 in Safety Insurance Group on October 17, 2024 and sell it today you would lose (300.00) from holding Safety Insurance Group or give up 3.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
OBSERVE MEDICAL ASA vs. Safety Insurance Group
Performance |
| Timeline |
| OBSERVE MEDICAL ASA |
| Safety Insurance |
OBSERVE MEDICAL and Safety Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OBSERVE MEDICAL and Safety Insurance
The main advantage of trading using opposite OBSERVE MEDICAL and Safety Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OBSERVE MEDICAL position performs unexpectedly, Safety Insurance 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 Safety Insurance will offset losses from the drop in Safety Insurance's long position.| OBSERVE MEDICAL vs. Safety Insurance Group | OBSERVE MEDICAL vs. Zurich Insurance Group | OBSERVE MEDICAL vs. ETFS Coffee ETC | OBSERVE MEDICAL vs. SWISS WATER DECAFFCOFFEE |
| Safety Insurance vs. VULCAN MATERIALS | Safety Insurance vs. Plastic Omnium | Safety Insurance vs. CANON MARKETING JP | Safety Insurance vs. Siamgas And Petrochemicals |
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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