Correlation Between Mendus AB and Dignitana

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

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

Diversification Opportunities for Mendus AB and Dignitana

0.59

Correlation Coefficient

Mendus AB  Dignitana

Very weak diversification

The 3 months correlation between Mendus and Dignitana is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Mendus AB and Dignitana AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dignitana AB and Mendus AB 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 Mendus AB are associated (or correlated) with Dignitana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dignitana AB has no effect on the direction of Mendus AB i.e., Mendus AB and Dignitana go up and down completely randomly.

Pair Corralation between Mendus AB and Dignitana

Assuming the 90 days trading horizon Mendus AB is expected to generate 0.63 times more return on investment than Dignitana. However, Mendus AB is 1.59 times less risky than Dignitana. It trades about 0.06 of its potential returns per unit of risk. Dignitana AB is currently generating about 0.02 per unit of risk. If you would invest  787.00  in Mendus AB on September 13, 2024 and sell it today you would earn a total of  83.00  from holding Mendus AB or generate 10.55% return on investment over 90 days.

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

Mendus AB  vs.  Dignitana AB

Mendus AB

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mendus AB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Mendus AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

Dignitana AB

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dignitana AB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Dignitana may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Mendus AB and Dignitana

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

The idea behind Mendus AB and Dignitana 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.