Correlation Between Bonesupport Holding and MedCap AB

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

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

Diversification Opportunities for Bonesupport Holding and MedCap AB

0.47

Correlation Coefficient

Bonesupport Holding  MedCap AB

Very weak diversification

The 3 months correlation between Bonesupport and MedCap is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Bonesupport Holding AB and MedCap AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MedCap AB and Bonesupport 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 Bonesupport Holding AB are associated (or correlated) with MedCap AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MedCap AB has no effect on the direction of Bonesupport Holding i.e., Bonesupport Holding and MedCap AB go up and down completely randomly.

Pair Corralation between Bonesupport Holding and MedCap AB

Assuming the 90 days trading horizon Bonesupport Holding AB is expected to generate 0.6 times more return on investment than MedCap AB. However, Bonesupport Holding AB is 1.66 times less risky than MedCap AB. It trades about 0.04 of its potential returns per unit of risk. MedCap AB is currently generating about -0.11 per unit of risk. If you would invest  36,960  in Bonesupport Holding AB on December 1, 2024 and sell it today you would earn a total of  1,620  from holding Bonesupport Holding AB or generate 4.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Bonesupport Holding AB  vs.  MedCap AB

Bonesupport Holding

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bonesupport Holding AB are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Bonesupport Holding may actually be approaching a critical reversion point that can send shares even higher in April 2025.

MedCap AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days MedCap AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Bonesupport Holding and MedCap AB

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

The idea behind Bonesupport Holding AB and MedCap AB 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.