Correlation Between I Tech and Redsense Medical

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

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

Diversification Opportunities for I Tech and Redsense Medical

0.08

Correlation Coefficient

I Tech  Redsense Medical

Significant diversification

The 3 months correlation between ITECH and Redsense is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding I Tech and Redsense Medical AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Redsense Medical and I Tech 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 I Tech are associated (or correlated) with Redsense Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Redsense Medical has no effect on the direction of I Tech i.e., I Tech and Redsense Medical go up and down completely randomly.

Pair Corralation between I Tech and Redsense Medical

Assuming the 90 days trading horizon I Tech is expected to generate 0.6 times more return on investment than Redsense Medical. However, I Tech is 1.67 times less risky than Redsense Medical. It trades about 0.12 of its potential returns per unit of risk. Redsense Medical AB is currently generating about 0.0 per unit of risk. If you would invest  5,150  in I Tech on October 8, 2024 and sell it today you would earn a total of  850.00  from holding I Tech or generate 16.5% return on investment over 90 days.

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

I Tech  vs.  Redsense Medical AB

I Tech

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in I Tech are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, I Tech unveiled solid returns over the last few months and may actually be approaching a breakup point.

Redsense Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Redsense Medical AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Redsense Medical is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with I Tech and Redsense Medical

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

The idea behind I Tech and Redsense Medical 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 Stocks Directory module to find actively traded stocks across global markets.