Correlation Between SOEDER SPORTFISKE and ONWARD MEDICAL

Can any of the company-specific risk be diversified away by investing in both SOEDER SPORTFISKE and ONWARD MEDICAL 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 SOEDER SPORTFISKE and ONWARD MEDICAL into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SOEDER SPORTFISKE AB and ONWARD MEDICAL BV, you can compare the effects of market volatilities on SOEDER SPORTFISKE and ONWARD MEDICAL 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 SOEDER SPORTFISKE with a short position of ONWARD MEDICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOEDER SPORTFISKE and ONWARD MEDICAL.

Diversification Opportunities for SOEDER SPORTFISKE and ONWARD MEDICAL

0.24

Correlation Coefficient

SOEDER SPORTFISKE  ONWARD MEDICAL

Modest diversification

The 3 months correlation between SOEDER and ONWARD is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding SOEDER SPORTFISKE AB and ONWARD MEDICAL BV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ONWARD MEDICAL BV and SOEDER SPORTFISKE 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 SOEDER SPORTFISKE AB are associated (or correlated) with ONWARD MEDICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ONWARD MEDICAL BV has no effect on the direction of SOEDER SPORTFISKE i.e., SOEDER SPORTFISKE and ONWARD MEDICAL go up and down completely randomly.

Pair Corralation between SOEDER SPORTFISKE and ONWARD MEDICAL

Assuming the 90 days horizon SOEDER SPORTFISKE is expected to generate 1.11 times less return on investment than ONWARD MEDICAL. But when comparing it to its historical volatility, SOEDER SPORTFISKE AB is 1.52 times less risky than ONWARD MEDICAL. It trades about 0.27 of its potential returns per unit of risk. ONWARD MEDICAL BV is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  558.00  in ONWARD MEDICAL BV on October 26, 2024 and sell it today you would earn a total of  106.00  from holding ONWARD MEDICAL BV or generate 19.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.74%
Values	Daily Returns

SOEDER SPORTFISKE AB  vs.  ONWARD MEDICAL BV

SOEDER SPORTFISKE

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SOEDER SPORTFISKE AB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SOEDER SPORTFISKE reported solid returns over the last few months and may actually be approaching a breakup point.

ONWARD MEDICAL BV

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ONWARD MEDICAL BV are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ONWARD MEDICAL reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SOEDER SPORTFISKE and ONWARD MEDICAL

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

The idea behind SOEDER SPORTFISKE AB and ONWARD MEDICAL BV 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.

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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.