Correlation Between Mendus AB and Hansa Biopharma

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

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

Diversification Opportunities for Mendus AB and Hansa Biopharma

-0.43

Correlation Coefficient

Mendus AB  Hansa Biopharma

Very good diversification

The 3 months correlation between Mendus and Hansa is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Mendus AB and Hansa Biopharma AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hansa Biopharma 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 Hansa Biopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hansa Biopharma AB has no effect on the direction of Mendus AB i.e., Mendus AB and Hansa Biopharma go up and down completely randomly.

Pair Corralation between Mendus AB and Hansa Biopharma

Assuming the 90 days trading horizon Mendus AB is expected to generate 1.3 times more return on investment than Hansa Biopharma. However, Mendus AB is 1.3 times more volatile than Hansa Biopharma AB. It trades about 0.02 of its potential returns per unit of risk. Hansa Biopharma AB is currently generating about -0.18 per unit of risk. If you would invest  851.00  in Mendus AB on September 3, 2024 and sell it today you would lose (3.00) from holding Mendus AB or give up 0.35% of portfolio value over 90 days.

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

Mendus AB  vs.  Hansa Biopharma AB

Mendus AB

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mendus AB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Mendus AB is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Hansa Biopharma AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hansa Biopharma AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak 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.

Pair Trading with Mendus AB and Hansa Biopharma

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

The idea behind Mendus AB and Hansa Biopharma 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.