Correlation Between Fast Ejendom and Scandinavian Medical

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

By analyzing existing cross correlation between Fast Ejendom and Scandinavian Medical Solutions, you can compare the effects of market volatilities on Fast Ejendom and Scandinavian 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 Fast Ejendom with a short position of Scandinavian Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fast Ejendom and Scandinavian Medical.

Diversification Opportunities for Fast Ejendom and Scandinavian Medical

0.06

Correlation Coefficient

Fast Ejendom  Scandinavian Medical

Significant diversification

The 3 months correlation between Fast and Scandinavian is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Fast Ejendom and Scandinavian Medical Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Medical and Fast Ejendom 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 Fast Ejendom are associated (or correlated) with Scandinavian Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scandinavian Medical has no effect on the direction of Fast Ejendom i.e., Fast Ejendom and Scandinavian Medical go up and down completely randomly.

Pair Corralation between Fast Ejendom and Scandinavian Medical

Assuming the 90 days trading horizon Fast Ejendom is expected to generate 14.82 times less return on investment than Scandinavian Medical. But when comparing it to its historical volatility, Fast Ejendom is 1.61 times less risky than Scandinavian Medical. It trades about 0.01 of its potential returns per unit of risk. Scandinavian Medical Solutions is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  548.00  in Scandinavian Medical Solutions on October 23, 2024 and sell it today you would earn a total of  20.00  from holding Scandinavian Medical Solutions or generate 3.65% return on investment over 90 days.

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

Fast Ejendom  vs.  Scandinavian Medical Solutions

Fast Ejendom

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fast Ejendom has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Fast Ejendom is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Scandinavian Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Scandinavian Medical Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Scandinavian Medical is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fast Ejendom and Scandinavian Medical

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

The idea behind Fast Ejendom and Scandinavian Medical Solutions 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.