Correlation Between Sofwave Medical and Identi Healthcare
Can any of the company-specific risk be diversified away by investing in both Sofwave Medical and Identi Healthcare 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 Sofwave Medical and Identi Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sofwave Medical and Identi Healthcare, you can compare the effects of market volatilities on Sofwave Medical and Identi Healthcare 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 Sofwave Medical with a short position of Identi Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sofwave Medical and Identi Healthcare.
Diversification Opportunities for Sofwave Medical and Identi Healthcare
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sofwave and Identi is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Sofwave Medical and Identi Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Identi Healthcare and Sofwave 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 Sofwave Medical are associated (or correlated) with Identi Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Identi Healthcare has no effect on the direction of Sofwave Medical i.e., Sofwave Medical and Identi Healthcare go up and down completely randomly.
Pair Corralation between Sofwave Medical and Identi Healthcare
Assuming the 90 days trading horizon Sofwave Medical is expected to generate 20.88 times less return on investment than Identi Healthcare. But when comparing it to its historical volatility, Sofwave Medical is 4.52 times less risky than Identi Healthcare. It trades about 0.09 of its potential returns per unit of risk. Identi Healthcare is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest 18,260 in Identi Healthcare on October 21, 2024 and sell it today you would earn a total of 37,340 from holding Identi Healthcare or generate 204.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sofwave Medical vs. Identi Healthcare
Performance |
| Timeline |
| Sofwave Medical |
| Identi Healthcare |
Sofwave Medical and Identi Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sofwave Medical and Identi Healthcare
The main advantage of trading using opposite Sofwave Medical and Identi Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sofwave Medical position performs unexpectedly, Identi Healthcare 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 Identi Healthcare will offset losses from the drop in Identi Healthcare's long position.| Sofwave Medical vs. Intercure | Sofwave Medical vs. Epitomee Medical | Sofwave Medical vs. Brainsway | Sofwave Medical vs. Bio View |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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