Correlation Between Medincell and Eurobio Scientific

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

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

Diversification Opportunities for Medincell and Eurobio Scientific

-0.2

Correlation Coefficient

Medincell  Eurobio Scientific

Good diversification

The 3 months correlation between Medincell and Eurobio is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Medincell SA and Eurobio Scientific SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eurobio Scientific and Medincell 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 Medincell SA are associated (or correlated) with Eurobio Scientific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eurobio Scientific has no effect on the direction of Medincell i.e., Medincell and Eurobio Scientific go up and down completely randomly.

Pair Corralation between Medincell and Eurobio Scientific

Assuming the 90 days trading horizon Medincell SA is expected to generate 2.62 times more return on investment than Eurobio Scientific. However, Medincell is 2.62 times more volatile than Eurobio Scientific SA. It trades about 0.08 of its potential returns per unit of risk. Eurobio Scientific SA is currently generating about -0.01 per unit of risk. If you would invest  1,536  in Medincell SA on October 6, 2024 and sell it today you would earn a total of  218.00  from holding Medincell SA or generate 14.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Medincell SA  vs.  Eurobio Scientific SA

Medincell SA

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Medincell SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Medincell reported solid returns over the last few months and may actually be approaching a breakup point.

Eurobio Scientific

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eurobio Scientific SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Eurobio Scientific is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Medincell and Eurobio Scientific

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

The idea behind Medincell SA and Eurobio Scientific SA 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.

Check out your portfolio center.

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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.