Correlation Between Invisio Communications and MedCap AB

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

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

Diversification Opportunities for Invisio Communications and MedCap AB

-0.79

Correlation Coefficient

Invisio Communications  MedCap AB

Pay attention - limited upside

The 3 months correlation between Invisio and MedCap is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Invisio Communications AB and MedCap AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MedCap AB and Invisio Communications 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 Invisio Communications AB are associated (or correlated) with MedCap AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MedCap AB has no effect on the direction of Invisio Communications i.e., Invisio Communications and MedCap AB go up and down completely randomly.

Pair Corralation between Invisio Communications and MedCap AB

Assuming the 90 days trading horizon Invisio Communications AB is expected to generate 0.66 times more return on investment than MedCap AB. However, Invisio Communications AB is 1.52 times less risky than MedCap AB. It trades about 0.2 of its potential returns per unit of risk. MedCap AB is currently generating about -0.16 per unit of risk. If you would invest  27,550  in Invisio Communications AB on December 30, 2024 and sell it today you would earn a total of  11,550  from holding Invisio Communications AB or generate 41.92% return on investment over 90 days.

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

Invisio Communications AB  vs.  MedCap AB

Invisio Communications

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Invisio Communications AB are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Invisio Communications unveiled solid returns over the last few months and may actually be approaching a breakup point.

MedCap AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days MedCap AB 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 April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Invisio Communications and MedCap AB

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

The idea behind Invisio Communications AB and MedCap 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.

Check out your portfolio center.

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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.