Correlation Between Redsense Medical and MTI Investment
Can any of the company-specific risk be diversified away by investing in both Redsense Medical and MTI Investment 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 MTI Investment 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 MTI Investment SE, you can compare the effects of market volatilities on Redsense Medical and MTI Investment 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 MTI Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Redsense Medical and MTI Investment.
Diversification Opportunities for Redsense Medical and MTI Investment
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Redsense and MTI is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Redsense Medical AB and MTI Investment SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MTI Investment SE 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 MTI Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MTI Investment SE has no effect on the direction of Redsense Medical i.e., Redsense Medical and MTI Investment go up and down completely randomly.
Pair Corralation between Redsense Medical and MTI Investment
Assuming the 90 days trading horizon Redsense Medical AB is expected to generate 1.89 times more return on investment than MTI Investment. However, Redsense Medical is 1.89 times more volatile than MTI Investment SE. It trades about 0.03 of its potential returns per unit of risk. MTI Investment SE is currently generating about -0.11 per unit of risk. If you would invest 698.00 in Redsense Medical AB on August 29, 2024 and sell it today you would earn a total of 2.00 from holding Redsense Medical AB or generate 0.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Redsense Medical AB vs. MTI Investment SE
Performance |
| Timeline |
| Redsense Medical |
| MTI Investment SE |
Redsense Medical and MTI Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Redsense Medical and MTI Investment
The main advantage of trading using opposite Redsense Medical and MTI Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Redsense Medical position performs unexpectedly, MTI Investment 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 MTI Investment will offset losses from the drop in MTI Investment's long position.| Redsense Medical vs. Mantex AB | Redsense Medical vs. Genovis AB | Redsense Medical vs. Vestum AB | Redsense Medical vs. Karolinska Development 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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