Correlation Between MeVis Medical and Roche Holding

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

Diversification Opportunities for MeVis Medical and Roche Holding

-0.31

Correlation Coefficient

MeVis Medical  Roche Holding

Very good diversification

The 3 months correlation between MeVis and Roche is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding MeVis Medical Solutions and Roche Holding Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roche Holding 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 Roche Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roche Holding has no effect on the direction of MeVis Medical i.e., MeVis Medical and Roche Holding go up and down completely randomly.

Pair Corralation between MeVis Medical and Roche Holding

Assuming the 90 days trading horizon MeVis Medical Solutions is expected to under-perform the Roche Holding. But the stock apears to be less risky and, when comparing its historical volatility, MeVis Medical Solutions is 1.44 times less risky than Roche Holding. The stock trades about -0.04 of its potential returns per unit of risk. The Roche Holding Ltd is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  3,388  in Roche Holding Ltd on October 9, 2024 and sell it today you would lose (17.00) from holding Roche Holding Ltd or give up 0.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.81%
Values	Daily Returns

MeVis Medical Solutions  vs.  Roche Holding Ltd

MeVis Medical Solutions

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MeVis Medical Solutions are ranked lower than 5 (%) 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 current stock price uproar, may contribute to short-horizon losses for the private investors.

Roche Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Roche Holding Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Roche Holding 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 Roche Holding

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

The idea behind MeVis Medical Solutions and Roche Holding Ltd 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.