Correlation Between Diamyd Medical and Grupo Carso

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

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

Diversification Opportunities for Diamyd Medical and Grupo Carso

0.2

Correlation Coefficient

Diamyd Medical  Grupo Carso

Modest diversification

The 3 months correlation between Diamyd and Grupo is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Diamyd Medical AB and Grupo Carso SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Carso SAB and Diamyd Medical 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 Diamyd Medical AB are associated (or correlated) with Grupo Carso. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Carso SAB has no effect on the direction of Diamyd Medical i.e., Diamyd Medical and Grupo Carso go up and down completely randomly.

Pair Corralation between Diamyd Medical and Grupo Carso

Assuming the 90 days horizon Diamyd Medical is expected to generate 1.47 times less return on investment than Grupo Carso. In addition to that, Diamyd Medical is 1.66 times more volatile than Grupo Carso SAB. It trades about 0.03 of its total potential returns per unit of risk. Grupo Carso SAB is currently generating about 0.07 per unit of volatility. If you would invest  221.00  in Grupo Carso SAB on September 26, 2024 and sell it today you would earn a total of  294.00  from holding Grupo Carso SAB or generate 133.03% return on investment over 90 days.

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

Diamyd Medical AB  vs.  Grupo Carso SAB

Diamyd Medical AB

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Diamyd Medical AB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Diamyd Medical reported solid returns over the last few months and may actually be approaching a breakup point.

Grupo Carso SAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Carso SAB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Grupo Carso is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Diamyd Medical and Grupo Carso

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

The idea behind Diamyd Medical AB and Grupo Carso SAB 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.