Correlation Between Diamyd Medical and CanSino Biologics
Can any of the company-specific risk be diversified away by investing in both Diamyd Medical and CanSino Biologics 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 CanSino Biologics 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 CanSino Biologics, you can compare the effects of market volatilities on Diamyd Medical and CanSino Biologics 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 CanSino Biologics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamyd Medical and CanSino Biologics.
Diversification Opportunities for Diamyd Medical and CanSino Biologics
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Diamyd and CanSino is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Diamyd Medical AB and CanSino Biologics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CanSino Biologics 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 CanSino Biologics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CanSino Biologics has no effect on the direction of Diamyd Medical i.e., Diamyd Medical and CanSino Biologics go up and down completely randomly.
Pair Corralation between Diamyd Medical and CanSino Biologics
Assuming the 90 days horizon Diamyd Medical AB is expected to generate 0.95 times more return on investment than CanSino Biologics. However, Diamyd Medical AB is 1.05 times less risky than CanSino Biologics. It trades about 0.14 of its potential returns per unit of risk. CanSino Biologics is currently generating about 0.06 per unit of risk. If you would invest 109.00 in Diamyd Medical AB on October 27, 2024 and sell it today you would earn a total of 40.00 from holding Diamyd Medical AB or generate 36.7% 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. CanSino Biologics
Performance |
Timeline |
Diamyd Medical AB |
CanSino Biologics |
Diamyd Medical and CanSino Biologics Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Diamyd Medical and CanSino Biologics
The main advantage of trading using opposite Diamyd Medical and CanSino Biologics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamyd Medical position performs unexpectedly, CanSino Biologics 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 CanSino Biologics will offset losses from the drop in CanSino Biologics' long position.Diamyd Medical vs. Playa Hotels Resorts | ||
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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