Correlation Between Scandinavian Medical and FOM Technologies
Can any of the company-specific risk be diversified away by investing in both Scandinavian Medical and FOM Technologies 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 Scandinavian Medical and FOM Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scandinavian Medical Solutions and FOM Technologies AS, you can compare the effects of market volatilities on Scandinavian Medical and FOM Technologies 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 Scandinavian Medical with a short position of FOM Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Medical and FOM Technologies.
Diversification Opportunities for Scandinavian Medical and FOM Technologies
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Scandinavian and FOM is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Medical Solutions and FOM Technologies AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FOM Technologies and Scandinavian 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 Scandinavian Medical Solutions are associated (or correlated) with FOM Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FOM Technologies has no effect on the direction of Scandinavian Medical i.e., Scandinavian Medical and FOM Technologies go up and down completely randomly.
Pair Corralation between Scandinavian Medical and FOM Technologies
Assuming the 90 days trading horizon Scandinavian Medical Solutions is expected to generate 0.93 times more return on investment than FOM Technologies. However, Scandinavian Medical Solutions is 1.07 times less risky than FOM Technologies. It trades about 0.13 of its potential returns per unit of risk. FOM Technologies AS is currently generating about -0.44 per unit of risk. If you would invest 604.00 in Scandinavian Medical Solutions on August 26, 2024 and sell it today you would earn a total of 60.00 from holding Scandinavian Medical Solutions or generate 9.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scandinavian Medical Solutions vs. FOM Technologies AS
Performance |
| Timeline |
| Scandinavian Medical |
| FOM Technologies |
Scandinavian Medical and FOM Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandinavian Medical and FOM Technologies
The main advantage of trading using opposite Scandinavian Medical and FOM Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Medical position performs unexpectedly, FOM Technologies 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 FOM Technologies will offset losses from the drop in FOM Technologies' long position.| Scandinavian Medical vs. MapsPeople AS | Scandinavian Medical vs. Penneo AS | Scandinavian Medical vs. Dataproces Group AS | Scandinavian Medical vs. Orderyoyo AS |
| FOM Technologies vs. cBrain AS | FOM Technologies vs. Penneo AS | FOM Technologies vs. Shape Robotics AS | FOM Technologies vs. ALK Abell AS |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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