Correlation Between Real Heart and Xvivo Perfusion

Can any of the company-specific risk be diversified away by investing in both Real Heart and Xvivo Perfusion 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 Real Heart and Xvivo Perfusion into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Real Heart and Xvivo Perfusion AB, you can compare the effects of market volatilities on Real Heart and Xvivo Perfusion 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 Real Heart with a short position of Xvivo Perfusion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Real Heart and Xvivo Perfusion.

Diversification Opportunities for Real Heart and Xvivo Perfusion

0.54

Correlation Coefficient

Real Heart  Xvivo Perfusion

Very weak diversification

The 3 months correlation between Real and Xvivo is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Real Heart and Xvivo Perfusion AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xvivo Perfusion AB and Real Heart 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 Real Heart are associated (or correlated) with Xvivo Perfusion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xvivo Perfusion AB has no effect on the direction of Real Heart i.e., Real Heart and Xvivo Perfusion go up and down completely randomly.

Pair Corralation between Real Heart and Xvivo Perfusion

Assuming the 90 days trading horizon Real Heart is expected to under-perform the Xvivo Perfusion. In addition to that, Real Heart is 2.28 times more volatile than Xvivo Perfusion AB. It trades about -0.19 of its total potential returns per unit of risk. Xvivo Perfusion AB is currently generating about -0.06 per unit of volatility. If you would invest  49,850  in Xvivo Perfusion AB on September 12, 2024 and sell it today you would lose (4,600) from holding Xvivo Perfusion AB or give up 9.23% of portfolio value over 90 days.

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

Real Heart  vs.  Xvivo Perfusion AB

Real Heart

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Real Heart has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Xvivo Perfusion AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xvivo Perfusion AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Real Heart and Xvivo Perfusion

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

The idea behind Real Heart and Xvivo Perfusion AB 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.