Correlation Between Saule Technologies and Medicofarma Biotech
Can any of the company-specific risk be diversified away by investing in both Saule Technologies and Medicofarma Biotech 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 Saule Technologies and Medicofarma Biotech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Saule Technologies SA and Medicofarma Biotech SA, you can compare the effects of market volatilities on Saule Technologies and Medicofarma Biotech 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 Saule Technologies with a short position of Medicofarma Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Saule Technologies and Medicofarma Biotech.
Diversification Opportunities for Saule Technologies and Medicofarma Biotech
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Saule and Medicofarma is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Saule Technologies SA and Medicofarma Biotech SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medicofarma Biotech and Saule Technologies 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 Saule Technologies SA are associated (or correlated) with Medicofarma Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medicofarma Biotech has no effect on the direction of Saule Technologies i.e., Saule Technologies and Medicofarma Biotech go up and down completely randomly.
Pair Corralation between Saule Technologies and Medicofarma Biotech
Assuming the 90 days trading horizon Saule Technologies SA is expected to generate 0.73 times more return on investment than Medicofarma Biotech. However, Saule Technologies SA is 1.37 times less risky than Medicofarma Biotech. It trades about 0.13 of its potential returns per unit of risk. Medicofarma Biotech SA is currently generating about -0.28 per unit of risk. If you would invest 127.00 in Saule Technologies SA on November 4, 2024 and sell it today you would earn a total of 11.00 from holding Saule Technologies SA or generate 8.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Saule Technologies SA vs. Medicofarma Biotech SA
Performance |
| Timeline |
| Saule Technologies |
| Medicofarma Biotech |
Saule Technologies and Medicofarma Biotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Saule Technologies and Medicofarma Biotech
The main advantage of trading using opposite Saule Technologies and Medicofarma Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Saule Technologies position performs unexpectedly, Medicofarma Biotech 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 Medicofarma Biotech will offset losses from the drop in Medicofarma Biotech's long position.| Saule Technologies vs. Clean Carbon Energy | Saule Technologies vs. ADX | Saule Technologies vs. Agroliga Group PLC | Saule Technologies vs. Vee SA |
| Medicofarma Biotech vs. Clean Carbon Energy | Medicofarma Biotech vs. ADX | Medicofarma Biotech vs. Agroliga Group PLC | Medicofarma Biotech vs. Vee SA |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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