Correlation Between Mendus AB and Lohilo Foods

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

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

Diversification Opportunities for Mendus AB and Lohilo Foods

-0.09

Correlation Coefficient

Mendus AB  Lohilo Foods

Good diversification

The 3 months correlation between Mendus and Lohilo is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Mendus AB and Lohilo Foods AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lohilo Foods 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 Lohilo Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lohilo Foods AB has no effect on the direction of Mendus AB i.e., Mendus AB and Lohilo Foods go up and down completely randomly.

Pair Corralation between Mendus AB and Lohilo Foods

Assuming the 90 days trading horizon Mendus AB is expected to generate 0.97 times more return on investment than Lohilo Foods. However, Mendus AB is 1.03 times less risky than Lohilo Foods. It trades about 0.05 of its potential returns per unit of risk. Lohilo Foods AB is currently generating about -0.11 per unit of risk. If you would invest  825.00  in Mendus AB on September 8, 2024 and sell it today you would earn a total of  75.00  from holding Mendus AB or generate 9.09% return on investment over 90 days.

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

Mendus AB  vs.  Lohilo Foods AB

Mendus AB

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mendus AB are ranked lower than 3 (%) 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.

Lohilo Foods AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lohilo Foods AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Mendus AB and Lohilo Foods

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

The idea behind Mendus AB and Lohilo Foods 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.