Correlation Between Autoneum Holding and Medacta Group

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

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

Diversification Opportunities for Autoneum Holding and Medacta Group

0.5

Correlation Coefficient

Autoneum Holding  Medacta Group

Very weak diversification

The 3 months correlation between Autoneum and Medacta is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Autoneum Holding AG and Medacta Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medacta Group SA and Autoneum Holding 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 Autoneum Holding AG are associated (or correlated) with Medacta Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medacta Group SA has no effect on the direction of Autoneum Holding i.e., Autoneum Holding and Medacta Group go up and down completely randomly.

Pair Corralation between Autoneum Holding and Medacta Group

Assuming the 90 days trading horizon Autoneum Holding is expected to generate 60.64 times less return on investment than Medacta Group. But when comparing it to its historical volatility, Autoneum Holding AG is 1.32 times less risky than Medacta Group. It trades about 0.0 of its potential returns per unit of risk. Medacta Group SA is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  10,660  in Medacta Group SA on December 29, 2024 and sell it today you would earn a total of  2,260  from holding Medacta Group SA or generate 21.2% return on investment over 90 days.

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

Autoneum Holding AG  vs.  Medacta Group SA

Autoneum Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Autoneum Holding AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Autoneum Holding is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Medacta Group SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Medacta Group SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Medacta Group showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Autoneum Holding and Medacta Group

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

The idea behind Autoneum Holding AG and Medacta Group 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.

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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.