Correlation Between MedCap AB and Bactiguard Holding

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

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

Diversification Opportunities for MedCap AB and Bactiguard Holding

0.65

Correlation Coefficient

MedCap AB  Bactiguard Holding

Poor diversification

The 3 months correlation between MedCap and Bactiguard is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding MedCap AB and Bactiguard Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bactiguard Holding and MedCap AB 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 MedCap AB are associated (or correlated) with Bactiguard Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bactiguard Holding has no effect on the direction of MedCap AB i.e., MedCap AB and Bactiguard Holding go up and down completely randomly.

Pair Corralation between MedCap AB and Bactiguard Holding

Assuming the 90 days trading horizon MedCap AB is expected to under-perform the Bactiguard Holding. In addition to that, MedCap AB is 1.08 times more volatile than Bactiguard Holding AB. It trades about -0.1 of its total potential returns per unit of risk. Bactiguard Holding AB is currently generating about 0.0 per unit of volatility. If you would invest  3,700  in Bactiguard Holding AB on November 29, 2024 and sell it today you would lose (220.00) from holding Bactiguard Holding AB or give up 5.95% of portfolio value over 90 days.

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

MedCap AB  vs.  Bactiguard Holding AB

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 March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Bactiguard Holding

Risk-Adjusted Performance

Weak

Over the last 90 days Bactiguard Holding AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Bactiguard Holding is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with MedCap AB and Bactiguard Holding

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

The idea behind MedCap AB and Bactiguard Holding 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.

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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.