Correlation Between Redsense Medical and AddLife AB
Can any of the company-specific risk be diversified away by investing in both Redsense Medical and AddLife AB 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 Redsense Medical and AddLife AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Redsense Medical AB and AddLife AB, you can compare the effects of market volatilities on Redsense Medical and AddLife AB 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 Redsense Medical with a short position of AddLife AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Redsense Medical and AddLife AB.
Diversification Opportunities for Redsense Medical and AddLife AB
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Redsense and AddLife is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Redsense Medical AB and AddLife AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AddLife AB and Redsense 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 Redsense Medical AB are associated (or correlated) with AddLife AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AddLife AB has no effect on the direction of Redsense Medical i.e., Redsense Medical and AddLife AB go up and down completely randomly.
Pair Corralation between Redsense Medical and AddLife AB
Assuming the 90 days trading horizon Redsense Medical is expected to generate 2.13 times less return on investment than AddLife AB. In addition to that, Redsense Medical is 1.53 times more volatile than AddLife AB. It trades about 0.01 of its total potential returns per unit of risk. AddLife AB is currently generating about 0.03 per unit of volatility. If you would invest 11,387 in AddLife AB on September 3, 2024 and sell it today you would earn a total of 2,043 from holding AddLife AB or generate 17.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.39% |
| Values | Daily Returns |
Redsense Medical AB vs. AddLife AB
Performance |
| Timeline |
| Redsense Medical |
| AddLife AB |
Redsense Medical and AddLife AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Redsense Medical and AddLife AB
The main advantage of trading using opposite Redsense Medical and AddLife AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Redsense Medical position performs unexpectedly, AddLife AB 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 AddLife AB will offset losses from the drop in AddLife AB's long position.| Redsense Medical vs. Getinge AB ser | Redsense Medical vs. Elekta AB | Redsense Medical vs. AddLife AB | Redsense Medical vs. Biotage AB |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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