Correlation Between NFL Biosciences and Medesis Pharma

Can any of the company-specific risk be diversified away by investing in both NFL Biosciences and Medesis Pharma 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 NFL Biosciences and Medesis Pharma into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NFL Biosciences SAS and Medesis Pharma SA, you can compare the effects of market volatilities on NFL Biosciences and Medesis Pharma 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 NFL Biosciences with a short position of Medesis Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of NFL Biosciences and Medesis Pharma.

Diversification Opportunities for NFL Biosciences and Medesis Pharma

0.4

Correlation Coefficient

NFL Biosciences  Medesis Pharma

Very weak diversification

The 3 months correlation between NFL and Medesis is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding NFL Biosciences SAS and Medesis Pharma SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medesis Pharma SA and NFL Biosciences 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 NFL Biosciences SAS are associated (or correlated) with Medesis Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medesis Pharma SA has no effect on the direction of NFL Biosciences i.e., NFL Biosciences and Medesis Pharma go up and down completely randomly.

Pair Corralation between NFL Biosciences and Medesis Pharma

Assuming the 90 days trading horizon NFL Biosciences SAS is expected to generate 1.28 times more return on investment than Medesis Pharma. However, NFL Biosciences is 1.28 times more volatile than Medesis Pharma SA. It trades about 0.16 of its potential returns per unit of risk. Medesis Pharma SA is currently generating about 0.11 per unit of risk. If you would invest  174.00  in NFL Biosciences SAS on October 5, 2024 and sell it today you would earn a total of  20.00  from holding NFL Biosciences SAS or generate 11.49% return on investment over 90 days.

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

NFL Biosciences SAS  vs.  Medesis Pharma SA

NFL Biosciences SAS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NFL Biosciences SAS has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, NFL Biosciences is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Medesis Pharma SA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Medesis Pharma SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Medesis Pharma is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with NFL Biosciences and Medesis Pharma

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

The idea behind NFL Biosciences SAS and Medesis Pharma SA 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 Transaction History module to view history of all your transactions and understand their impact on performance.