Correlation Between Medincell and BIO UV

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

By analyzing existing cross correlation between Medincell SA and BIO UV Group, you can compare the effects of market volatilities on Medincell and BIO UV 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 BIO UV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medincell and BIO UV.

Diversification Opportunities for Medincell and BIO UV

-0.32

Correlation Coefficient

Medincell  BIO UV

Very good diversification

The 3 months correlation between Medincell and BIO is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Medincell SA and BIO UV Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BIO UV Group 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 BIO UV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BIO UV Group has no effect on the direction of Medincell i.e., Medincell and BIO UV go up and down completely randomly.

Pair Corralation between Medincell and BIO UV

Assuming the 90 days trading horizon Medincell SA is expected to generate 1.06 times more return on investment than BIO UV. However, Medincell is 1.06 times more volatile than BIO UV Group. It trades about 0.08 of its potential returns per unit of risk. BIO UV Group is currently generating about 0.08 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.  BIO UV Group

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.

BIO UV Group

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with Medincell and BIO UV

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

The idea behind Medincell SA and BIO UV Group 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.