Correlation Between Surgical Science and Paxman AB
Can any of the company-specific risk be diversified away by investing in both Surgical Science and Paxman AB 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 Surgical Science and Paxman AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Surgical Science Sweden and Paxman AB, you can compare the effects of market volatilities on Surgical Science and Paxman AB 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 Surgical Science with a short position of Paxman AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Surgical Science and Paxman AB.
Diversification Opportunities for Surgical Science and Paxman AB
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Surgical and Paxman is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Surgical Science Sweden and Paxman AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paxman AB and Surgical Science 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 Surgical Science Sweden are associated (or correlated) with Paxman AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paxman AB has no effect on the direction of Surgical Science i.e., Surgical Science and Paxman AB go up and down completely randomly.
Pair Corralation between Surgical Science and Paxman AB
Assuming the 90 days trading horizon Surgical Science is expected to generate 1.27 times less return on investment than Paxman AB. But when comparing it to its historical volatility, Surgical Science Sweden is 1.0 times less risky than Paxman AB. It trades about 0.12 of its potential returns per unit of risk. Paxman AB is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 5,740 in Paxman AB on August 28, 2024 and sell it today you would earn a total of 1,240 from holding Paxman AB or generate 21.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Surgical Science Sweden vs. Paxman AB
Performance |
| Timeline |
| Surgical Science Sweden |
| Paxman AB |
Surgical Science and Paxman AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Surgical Science and Paxman AB
The main advantage of trading using opposite Surgical Science and Paxman AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Surgical Science position performs unexpectedly, Paxman AB 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 Paxman AB will offset losses from the drop in Paxman AB's long position.| Surgical Science vs. BICO Group AB | Surgical Science vs. Hexatronic Group AB | Surgical Science vs. Swedencare publ AB | Surgical Science vs. MIPS AB |
| Paxman AB vs. Dignitana AB | Paxman AB vs. C Rad AB | Paxman AB vs. Surgical Science Sweden | Paxman AB vs. Sedana Medical AB |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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