Correlation Between Vitrolife and RaySearch Laboratories
Can any of the company-specific risk be diversified away by investing in both Vitrolife and RaySearch Laboratories 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 Vitrolife and RaySearch Laboratories into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vitrolife AB and RaySearch Laboratories AB, you can compare the effects of market volatilities on Vitrolife and RaySearch Laboratories 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 Vitrolife with a short position of RaySearch Laboratories. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vitrolife and RaySearch Laboratories.
Diversification Opportunities for Vitrolife and RaySearch Laboratories
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vitrolife and RaySearch is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Vitrolife AB and RaySearch Laboratories AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RaySearch Laboratories and Vitrolife 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 Vitrolife AB are associated (or correlated) with RaySearch Laboratories. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RaySearch Laboratories has no effect on the direction of Vitrolife i.e., Vitrolife and RaySearch Laboratories go up and down completely randomly.
Pair Corralation between Vitrolife and RaySearch Laboratories
Assuming the 90 days trading horizon Vitrolife AB is expected to under-perform the RaySearch Laboratories. But the stock apears to be less risky and, when comparing its historical volatility, Vitrolife AB is 2.0 times less risky than RaySearch Laboratories. The stock trades about -0.16 of its potential returns per unit of risk. The RaySearch Laboratories AB is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 15,720 in RaySearch Laboratories AB on August 25, 2024 and sell it today you would earn a total of 4,280 from holding RaySearch Laboratories AB or generate 27.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vitrolife AB vs. RaySearch Laboratories AB
Performance |
| Timeline |
| Vitrolife AB |
| RaySearch Laboratories |
Vitrolife and RaySearch Laboratories Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vitrolife and RaySearch Laboratories
The main advantage of trading using opposite Vitrolife and RaySearch Laboratories positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vitrolife position performs unexpectedly, RaySearch Laboratories 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 RaySearch Laboratories will offset losses from the drop in RaySearch Laboratories' long position.The idea behind Vitrolife AB and RaySearch Laboratories AB pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| RaySearch Laboratories vs. Elekta AB | RaySearch Laboratories vs. Vitrolife AB | RaySearch Laboratories vs. CellaVision AB | RaySearch Laboratories vs. Probi 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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