Correlation Between Bonesupport Holding and Redsense Medical

Can any of the company-specific risk be diversified away by investing in both Bonesupport Holding and Redsense 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 Bonesupport Holding and Redsense Medical 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 Redsense Medical AB, you can compare the effects of market volatilities on Bonesupport Holding and Redsense 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 Bonesupport Holding with a short position of Redsense Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bonesupport Holding and Redsense Medical.

Diversification Opportunities for Bonesupport Holding and Redsense Medical

-0.04

Correlation Coefficient

Bonesupport Holding  Redsense Medical

Good diversification

The 3 months correlation between Bonesupport and Redsense is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Bonesupport Holding AB and Redsense Medical AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Redsense Medical 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 Redsense Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Redsense Medical has no effect on the direction of Bonesupport Holding i.e., Bonesupport Holding and Redsense Medical go up and down completely randomly.

Pair Corralation between Bonesupport Holding and Redsense Medical

Assuming the 90 days trading horizon Bonesupport Holding AB is expected to generate 0.6 times more return on investment than Redsense Medical. However, Bonesupport Holding AB is 1.66 times less risky than Redsense Medical. It trades about 0.12 of its potential returns per unit of risk. Redsense Medical AB is currently generating about 0.03 per unit of risk. If you would invest  29,880  in Bonesupport Holding AB on September 9, 2024 and sell it today you would earn a total of  6,040  from holding Bonesupport Holding AB or generate 20.21% return on investment over 90 days.

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

Bonesupport Holding AB  vs.  Redsense Medical AB

Bonesupport Holding

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bonesupport Holding AB are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Bonesupport Holding unveiled solid returns over the last few months and may actually be approaching a breakup point.

Redsense Medical

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Redsense Medical AB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Redsense Medical may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Bonesupport Holding and Redsense Medical

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

The idea behind Bonesupport Holding AB and Redsense Medical 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.