Correlation Between Clinical Laserthermia and CirChem AB

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

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

Diversification Opportunities for Clinical Laserthermia and CirChem AB

-0.62

Correlation Coefficient

Clinical Laserthermia  CirChem AB

Excellent diversification

The 3 months correlation between Clinical and CirChem is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Clinical Laserthermia Systems and CirChem AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CirChem AB and Clinical Laserthermia 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 Clinical Laserthermia Systems are associated (or correlated) with CirChem AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CirChem AB has no effect on the direction of Clinical Laserthermia i.e., Clinical Laserthermia and CirChem AB go up and down completely randomly.

Pair Corralation between Clinical Laserthermia and CirChem AB

Assuming the 90 days trading horizon Clinical Laserthermia Systems is expected to under-perform the CirChem AB. In addition to that, Clinical Laserthermia is 1.56 times more volatile than CirChem AB. It trades about -0.03 of its total potential returns per unit of risk. CirChem AB is currently generating about 0.1 per unit of volatility. If you would invest  251.00  in CirChem AB on September 3, 2024 and sell it today you would earn a total of  52.00  from holding CirChem AB or generate 20.72% return on investment over 90 days.

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

Clinical Laserthermia Systems  vs.  CirChem AB

Clinical Laserthermia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clinical Laserthermia Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

CirChem AB

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CirChem AB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, CirChem AB sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Clinical Laserthermia and CirChem AB

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

The idea behind Clinical Laserthermia Systems and CirChem 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.