Correlation Between C Rad and Mentice AB

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

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

Diversification Opportunities for C Rad and Mentice AB

0.64

Correlation Coefficient

C Rad  Mentice AB

Poor diversification

The 3 months correlation between CRAD-B and Mentice is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding C Rad AB and Mentice AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mentice AB and C Rad 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 C Rad AB are associated (or correlated) with Mentice AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mentice AB has no effect on the direction of C Rad i.e., C Rad and Mentice AB go up and down completely randomly.

Pair Corralation between C Rad and Mentice AB

Assuming the 90 days trading horizon C Rad AB is expected to under-perform the Mentice AB. But the stock apears to be less risky and, when comparing its historical volatility, C Rad AB is 1.33 times less risky than Mentice AB. The stock trades about -0.1 of its potential returns per unit of risk. The Mentice AB is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  2,880  in Mentice AB on September 24, 2024 and sell it today you would lose (380.00) from holding Mentice AB or give up 13.19% of portfolio value over 90 days.

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

C Rad AB  vs.  Mentice AB

C Rad AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days C Rad AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Mentice AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mentice AB 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.

Pair Trading with C Rad and Mentice AB

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

The idea behind C Rad AB and Mentice 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.