Correlation Between Med Life and TRANSILVANIA LEASING

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

By analyzing existing cross correlation between Med Life SA and TRANSILVANIA LEASING SI, you can compare the effects of market volatilities on Med Life and TRANSILVANIA LEASING 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 Med Life with a short position of TRANSILVANIA LEASING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Med Life and TRANSILVANIA LEASING.

Diversification Opportunities for Med Life and TRANSILVANIA LEASING

0.27

Correlation Coefficient

Med Life  TRANSILVANIA LEASING

Modest diversification

The 3 months correlation between Med and TRANSILVANIA is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Med Life SA and TRANSILVANIA LEASING SI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRANSILVANIA LEASING and Med Life 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 Med Life SA are associated (or correlated) with TRANSILVANIA LEASING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRANSILVANIA LEASING has no effect on the direction of Med Life i.e., Med Life and TRANSILVANIA LEASING go up and down completely randomly.

Pair Corralation between Med Life and TRANSILVANIA LEASING

Given the investment horizon of 90 days Med Life SA is expected to under-perform the TRANSILVANIA LEASING. But the stock apears to be less risky and, when comparing its historical volatility, Med Life SA is 1.1 times less risky than TRANSILVANIA LEASING. The stock trades about -0.02 of its potential returns per unit of risk. The TRANSILVANIA LEASING SI is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  4.21  in TRANSILVANIA LEASING SI on October 9, 2024 and sell it today you would earn a total of  4.24  from holding TRANSILVANIA LEASING SI or generate 100.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.59%
Values	Daily Returns

Med Life SA  vs.  TRANSILVANIA LEASING SI

Med Life SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Med Life SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Med Life is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

TRANSILVANIA LEASING

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TRANSILVANIA LEASING SI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Med Life and TRANSILVANIA LEASING

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

The idea behind Med Life SA and TRANSILVANIA LEASING SI 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.