Correlation Between Medistim ASA and Navamedic ASA
Can any of the company-specific risk be diversified away by investing in both Medistim ASA and Navamedic ASA 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 Medistim ASA and Navamedic ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Medistim ASA and Navamedic ASA, you can compare the effects of market volatilities on Medistim ASA and Navamedic ASA 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 Medistim ASA with a short position of Navamedic ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medistim ASA and Navamedic ASA.
Diversification Opportunities for Medistim ASA and Navamedic ASA
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Medistim and Navamedic is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Medistim ASA and Navamedic ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Navamedic ASA and Medistim ASA 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 Medistim ASA are associated (or correlated) with Navamedic ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Navamedic ASA has no effect on the direction of Medistim ASA i.e., Medistim ASA and Navamedic ASA go up and down completely randomly.
Pair Corralation between Medistim ASA and Navamedic ASA
Assuming the 90 days trading horizon Medistim ASA is expected to under-perform the Navamedic ASA. But the stock apears to be less risky and, when comparing its historical volatility, Medistim ASA is 1.28 times less risky than Navamedic ASA. The stock trades about -0.11 of its potential returns per unit of risk. The Navamedic ASA is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 2,770 in Navamedic ASA on September 6, 2024 and sell it today you would lose (320.00) from holding Navamedic ASA or give up 11.55% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 98.46% |
Values | Daily Returns |
Medistim ASA vs. Navamedic ASA
Performance |
Timeline |
Medistim ASA |
Navamedic ASA |
Medistim ASA and Navamedic ASA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Medistim ASA and Navamedic ASA
The main advantage of trading using opposite Medistim ASA and Navamedic ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medistim ASA position performs unexpectedly, Navamedic ASA 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 Navamedic ASA will offset losses from the drop in Navamedic ASA's long position.Medistim ASA vs. Sparebank 1 SR | Medistim ASA vs. Veidekke ASA | Medistim ASA vs. Sogn Sparebank | Medistim ASA vs. Romsdal Sparebank |
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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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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