Correlation Between BIO UV and Medincell

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

By analyzing existing cross correlation between BIO UV Group and Medincell SA, you can compare the effects of market volatilities on BIO UV and Medincell 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 BIO UV with a short position of Medincell. Check out your portfolio center. Please also check ongoing floating volatility patterns of BIO UV and Medincell.

Diversification Opportunities for BIO UV and Medincell

-0.32

Correlation Coefficient

BIO UV  Medincell

Very good diversification

The 3 months correlation between BIO and Medincell is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding BIO UV Group and Medincell SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medincell SA and BIO UV 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 BIO UV Group are associated (or correlated) with Medincell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medincell SA has no effect on the direction of BIO UV i.e., BIO UV and Medincell go up and down completely randomly.

Pair Corralation between BIO UV and Medincell

Assuming the 90 days trading horizon BIO UV is expected to generate 1.07 times less return on investment than Medincell. But when comparing it to its historical volatility, BIO UV Group is 1.06 times less risky than Medincell. It trades about 0.08 of its potential returns per unit of risk. Medincell SA is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,536  in Medincell SA on October 6, 2024 and sell it today you would earn a total of  218.00  from holding Medincell SA or generate 14.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

BIO UV Group  vs.  Medincell SA

BIO UV Group

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BIO UV Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, BIO UV reported solid returns over the last few months and may actually be approaching a breakup point.

Medincell SA

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Medincell SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Medincell reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BIO UV and Medincell

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

The idea behind BIO UV Group and Medincell 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..