Correlation Between Catella AB and MedCap AB

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

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

Diversification Opportunities for Catella AB and MedCap AB

-0.76

Correlation Coefficient

Catella AB  MedCap AB

Pay attention - limited upside

The 3 months correlation between Catella and MedCap is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Catella AB A and MedCap AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MedCap AB and Catella AB 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 Catella AB A 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 Catella AB i.e., Catella AB and MedCap AB go up and down completely randomly.

Pair Corralation between Catella AB and MedCap AB

Assuming the 90 days trading horizon Catella AB A is expected to under-perform the MedCap AB. In addition to that, Catella AB is 1.08 times more volatile than MedCap AB. It trades about -0.08 of its total potential returns per unit of risk. MedCap AB is currently generating about 0.12 per unit of volatility. If you would invest  50,100  in MedCap AB on September 13, 2024 and sell it today you would earn a total of  9,400  from holding MedCap AB or generate 18.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Catella AB A  vs.  MedCap AB

Catella AB A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Catella AB A 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 January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

MedCap AB

Risk-Adjusted Performance

9 of 100

OK

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

Pair Trading with Catella AB and MedCap AB

The main advantage of trading using opposite Catella AB and MedCap AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catella AB 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 Catella AB A 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.