Correlation Between MeVis Medical and PRECISION DRILLING

Can any of the company-specific risk be diversified away by investing in both MeVis Medical and PRECISION DRILLING 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 PRECISION DRILLING 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 PRECISION DRILLING P, you can compare the effects of market volatilities on MeVis Medical and PRECISION DRILLING 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 PRECISION DRILLING. Check out your portfolio center. Please also check ongoing floating volatility patterns of MeVis Medical and PRECISION DRILLING.

Diversification Opportunities for MeVis Medical and PRECISION DRILLING

0.08

Correlation Coefficient

MeVis Medical  PRECISION DRILLING

Significant diversification

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

Pair Corralation between MeVis Medical and PRECISION DRILLING

Assuming the 90 days trading horizon MeVis Medical Solutions is expected to generate 0.55 times more return on investment than PRECISION DRILLING. However, MeVis Medical Solutions is 1.82 times less risky than PRECISION DRILLING. It trades about -0.03 of its potential returns per unit of risk. PRECISION DRILLING P is currently generating about -0.04 per unit of risk. If you would invest  2,380  in MeVis Medical Solutions on September 19, 2024 and sell it today you would lose (20.00) from holding MeVis Medical Solutions or give up 0.84% of portfolio value over 90 days.

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

MeVis Medical Solutions  vs.  PRECISION DRILLING P

MeVis Medical Solutions

Risk-Adjusted Performance

3 of 100

Insignificant

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

PRECISION DRILLING

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PRECISION DRILLING P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, PRECISION DRILLING is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with MeVis Medical and PRECISION DRILLING

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

The idea behind MeVis Medical Solutions and PRECISION DRILLING P 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..