Correlation Between Icares Medicus and Medeon Biodesign

Can any of the company-specific risk be diversified away by investing in both Icares Medicus and Medeon Biodesign 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 Icares Medicus and Medeon Biodesign into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Icares Medicus and Medeon Biodesign, you can compare the effects of market volatilities on Icares Medicus and Medeon Biodesign 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 Icares Medicus with a short position of Medeon Biodesign. Check out your portfolio center. Please also check ongoing floating volatility patterns of Icares Medicus and Medeon Biodesign.

Diversification Opportunities for Icares Medicus and Medeon Biodesign

0.55

Correlation Coefficient

Icares Medicus  Medeon Biodesign

Very weak diversification

The 3 months correlation between Icares and Medeon is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Icares Medicus and Medeon Biodesign in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medeon Biodesign and Icares Medicus 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 Icares Medicus are associated (or correlated) with Medeon Biodesign. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medeon Biodesign has no effect on the direction of Icares Medicus i.e., Icares Medicus and Medeon Biodesign go up and down completely randomly.

Pair Corralation between Icares Medicus and Medeon Biodesign

Assuming the 90 days trading horizon Icares Medicus is expected to generate 6.07 times less return on investment than Medeon Biodesign. In addition to that, Icares Medicus is 1.31 times more volatile than Medeon Biodesign. It trades about 0.03 of its total potential returns per unit of risk. Medeon Biodesign is currently generating about 0.22 per unit of volatility. If you would invest  3,970  in Medeon Biodesign on December 28, 2024 and sell it today you would earn a total of  795.00  from holding Medeon Biodesign or generate 20.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Icares Medicus  vs.  Medeon Biodesign

Icares Medicus

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Icares Medicus are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Icares Medicus is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Medeon Biodesign

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Medeon Biodesign are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Medeon Biodesign showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Icares Medicus and Medeon Biodesign

The main advantage of trading using opposite Icares Medicus and Medeon Biodesign positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Icares Medicus position performs unexpectedly, Medeon Biodesign 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 Medeon Biodesign will offset losses from the drop in Medeon Biodesign's long position.

The idea behind Icares Medicus and Medeon Biodesign 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.