Correlation Between Diamyd Medical and ONWARD MEDICAL

Can any of the company-specific risk be diversified away by investing in both Diamyd Medical 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 Diamyd Medical and ONWARD MEDICAL 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 ONWARD MEDICAL BV, you can compare the effects of market volatilities on Diamyd Medical 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 Diamyd Medical with a short position of ONWARD MEDICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamyd Medical and ONWARD MEDICAL.

Diversification Opportunities for Diamyd Medical and ONWARD MEDICAL

-0.07

Correlation Coefficient

Diamyd Medical  ONWARD MEDICAL

Good diversification

The 3 months correlation between Diamyd and ONWARD is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Diamyd Medical AB and ONWARD MEDICAL BV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ONWARD MEDICAL BV 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 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 BV has no effect on the direction of Diamyd Medical i.e., Diamyd Medical and ONWARD MEDICAL go up and down completely randomly.

Pair Corralation between Diamyd Medical and ONWARD MEDICAL

Assuming the 90 days horizon Diamyd Medical AB is expected to under-perform the ONWARD MEDICAL. In addition to that, Diamyd Medical is 1.08 times more volatile than ONWARD MEDICAL BV. It trades about -0.05 of its total potential returns per unit of risk. ONWARD MEDICAL BV is currently generating about 0.01 per unit of volatility. If you would invest  447.00  in ONWARD MEDICAL BV on September 3, 2024 and sell it today you would lose (5.00) from holding ONWARD MEDICAL BV or give up 1.12% of portfolio value over 90 days.

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

Diamyd Medical AB  vs.  ONWARD MEDICAL BV

Diamyd Medical AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Diamyd Medical AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

ONWARD MEDICAL BV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ONWARD MEDICAL BV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ONWARD MEDICAL 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 ONWARD MEDICAL

The main advantage of trading using opposite Diamyd Medical and ONWARD MEDICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamyd Medical 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 Diamyd Medical AB and ONWARD MEDICAL BV 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.