Correlation Between Redsense Medical and MilDef Group
Can any of the company-specific risk be diversified away by investing in both Redsense Medical and MilDef Group 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 MilDef Group 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 MilDef Group AB, you can compare the effects of market volatilities on Redsense Medical and MilDef Group 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 MilDef Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Redsense Medical and MilDef Group.
Diversification Opportunities for Redsense Medical and MilDef Group
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Redsense and MilDef is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Redsense Medical AB and MilDef Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MilDef Group 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 MilDef Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MilDef Group AB has no effect on the direction of Redsense Medical i.e., Redsense Medical and MilDef Group go up and down completely randomly.
Pair Corralation between Redsense Medical and MilDef Group
Assuming the 90 days trading horizon Redsense Medical AB is expected to under-perform the MilDef Group. In addition to that, Redsense Medical is 2.11 times more volatile than MilDef Group AB. It trades about -0.03 of its total potential returns per unit of risk. MilDef Group AB is currently generating about 0.31 per unit of volatility. If you would invest 10,020 in MilDef Group AB on September 12, 2024 and sell it today you would earn a total of 1,860 from holding MilDef Group AB or generate 18.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Redsense Medical AB vs. MilDef Group AB
Performance |
| Timeline |
| Redsense Medical |
| MilDef Group AB |
Redsense Medical and MilDef Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Redsense Medical and MilDef Group
The main advantage of trading using opposite Redsense Medical and MilDef Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Redsense Medical position performs unexpectedly, MilDef Group 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 MilDef Group will offset losses from the drop in MilDef Group's long position.| Redsense Medical vs. Surgical Science Sweden | Redsense Medical vs. Bonesupport Holding AB | Redsense Medical vs. Swedencare publ AB | Redsense Medical vs. Oncopeptides 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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