Correlation Between DIeteren Group and Onward Medical

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

By analyzing existing cross correlation between DIeteren Group SA and Onward Medical NV, you can compare the effects of market volatilities on DIeteren Group and Onward 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 DIeteren Group with a short position of Onward Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of DIeteren Group and Onward Medical.

Diversification Opportunities for DIeteren Group and Onward Medical

-0.43

Correlation Coefficient

DIeteren Group  Onward Medical

Very good diversification

The 3 months correlation between DIeteren and Onward is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding DIeteren Group SA and Onward Medical NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Onward Medical NV and DIeteren Group 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 DIeteren Group SA are associated (or correlated) with Onward Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Onward Medical NV has no effect on the direction of DIeteren Group i.e., DIeteren Group and Onward Medical go up and down completely randomly.

Pair Corralation between DIeteren Group and Onward Medical

Assuming the 90 days trading horizon DIeteren Group SA is expected to under-perform the Onward Medical. But the stock apears to be less risky and, when comparing its historical volatility, DIeteren Group SA is 1.52 times less risky than Onward Medical. The stock trades about -0.04 of its potential returns per unit of risk. The Onward Medical NV is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  473.00  in Onward Medical NV on September 5, 2024 and sell it today you would lose (3.00) from holding Onward Medical NV or give up 0.63% of portfolio value over 90 days.

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

DIeteren Group SA  vs.  Onward Medical NV

DIeteren Group SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DIeteren Group SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, DIeteren Group is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Onward Medical NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Onward Medical NV has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Onward Medical is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with DIeteren Group and Onward Medical

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

The idea behind DIeteren Group SA and Onward Medical NV 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.

Check out your portfolio center.

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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.