Correlation Between Redsense Medical and Nordic Asia
Can any of the company-specific risk be diversified away by investing in both Redsense Medical and Nordic Asia 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 Nordic Asia 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 Nordic Asia Investment, you can compare the effects of market volatilities on Redsense Medical and Nordic Asia 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 Nordic Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Redsense Medical and Nordic Asia.
Diversification Opportunities for Redsense Medical and Nordic Asia
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Redsense and Nordic is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Redsense Medical AB and Nordic Asia Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic Asia Investment 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 Nordic Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic Asia Investment has no effect on the direction of Redsense Medical i.e., Redsense Medical and Nordic Asia go up and down completely randomly.
Pair Corralation between Redsense Medical and Nordic Asia
Assuming the 90 days trading horizon Redsense Medical AB is expected to generate 3.45 times more return on investment than Nordic Asia. However, Redsense Medical is 3.45 times more volatile than Nordic Asia Investment. It trades about 0.05 of its potential returns per unit of risk. Nordic Asia Investment is currently generating about -0.04 per unit of risk. If you would invest 692.00 in Redsense Medical AB on September 1, 2024 and sell it today you would earn a total of 18.00 from holding Redsense Medical AB or generate 2.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Redsense Medical AB vs. Nordic Asia Investment
Performance |
| Timeline |
| Redsense Medical |
| Nordic Asia Investment |
Redsense Medical and Nordic Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Redsense Medical and Nordic Asia
The main advantage of trading using opposite Redsense Medical and Nordic Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Redsense Medical position performs unexpectedly, Nordic Asia 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 Nordic Asia will offset losses from the drop in Nordic Asia's long position.| Redsense Medical vs. AddLife AB | Redsense Medical vs. Biotage AB | Redsense Medical vs. Synsam AB | Redsense Medical vs. Bonesupport Holding 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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