Correlation Between CellaVision and Mendus AB

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

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

Diversification Opportunities for CellaVision and Mendus AB

-0.46

Correlation Coefficient

CellaVision  Mendus AB

Very good diversification

The 3 months correlation between CellaVision and Mendus is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding CellaVision AB and Mendus AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mendus AB and CellaVision 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 CellaVision AB are associated (or correlated) with Mendus AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mendus AB has no effect on the direction of CellaVision i.e., CellaVision and Mendus AB go up and down completely randomly.

Pair Corralation between CellaVision and Mendus AB

Assuming the 90 days trading horizon CellaVision AB is expected to under-perform the Mendus AB. But the stock apears to be less risky and, when comparing its historical volatility, CellaVision AB is 1.96 times less risky than Mendus AB. The stock trades about -0.11 of its potential returns per unit of risk. The Mendus AB is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  818.00  in Mendus AB on September 14, 2024 and sell it today you would earn a total of  52.00  from holding Mendus AB or generate 6.36% return on investment over 90 days.

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

CellaVision AB  vs.  Mendus AB

CellaVision AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

Mendus AB

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with CellaVision and Mendus AB

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

The idea behind CellaVision AB and Mendus 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.