Correlation Between MeVis Medical and Mitie Group

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

By analyzing existing cross correlation between MeVis Medical Solutions and Mitie Group PLC, you can compare the effects of market volatilities on MeVis Medical and Mitie Group 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 MeVis Medical with a short position of Mitie Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of MeVis Medical and Mitie Group.

Diversification Opportunities for MeVis Medical and Mitie Group

-0.27

Correlation Coefficient

MeVis Medical  Mitie Group

Very good diversification

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

Pair Corralation between MeVis Medical and Mitie Group

Assuming the 90 days trading horizon MeVis Medical Solutions is expected to under-perform the Mitie Group. But the stock apears to be less risky and, when comparing its historical volatility, MeVis Medical Solutions is 1.65 times less risky than Mitie Group. The stock trades about -0.04 of its potential returns per unit of risk. The Mitie Group PLC is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  141,300  in Mitie Group PLC on October 4, 2024 and sell it today you would lose (23,000) from holding Mitie Group PLC or give up 16.28% of portfolio value over 90 days.

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

MeVis Medical Solutions  vs.  Mitie Group PLC

MeVis Medical Solutions

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MeVis Medical Solutions are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, MeVis Medical is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Mitie Group PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mitie Group PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with MeVis Medical and Mitie Group

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

The idea behind MeVis Medical Solutions and Mitie Group PLC 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.