Correlation Between Mdica Sur and Cydsa SAB

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

By analyzing existing cross correlation between Mdica Sur SAB and Cydsa SAB de, you can compare the effects of market volatilities on Mdica Sur and Cydsa SAB 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 Mdica Sur with a short position of Cydsa SAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mdica Sur and Cydsa SAB.

Diversification Opportunities for Mdica Sur and Cydsa SAB

0.72

Correlation Coefficient

Mdica Sur  Cydsa SAB

Poor diversification

The 3 months correlation between Mdica and Cydsa is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Mdica Sur SAB and Cydsa SAB de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cydsa SAB de and Mdica Sur 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 Mdica Sur SAB are associated (or correlated) with Cydsa SAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cydsa SAB de has no effect on the direction of Mdica Sur i.e., Mdica Sur and Cydsa SAB go up and down completely randomly.

Pair Corralation between Mdica Sur and Cydsa SAB

Assuming the 90 days trading horizon Mdica Sur SAB is expected to generate 0.95 times more return on investment than Cydsa SAB. However, Mdica Sur SAB is 1.05 times less risky than Cydsa SAB. It trades about 0.05 of its potential returns per unit of risk. Cydsa SAB de is currently generating about -0.18 per unit of risk. If you would invest  3,349  in Mdica Sur SAB on October 9, 2024 and sell it today you would earn a total of  31.00  from holding Mdica Sur SAB or generate 0.93% return on investment over 90 days.

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

Mdica Sur SAB  vs.  Cydsa SAB de

Mdica Sur SAB

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mdica Sur SAB are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating forward indicators, Mdica Sur sustained solid returns over the last few months and may actually be approaching a breakup point.

Cydsa SAB de

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cydsa SAB de are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Cydsa SAB is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mdica Sur and Cydsa SAB

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

The idea behind Mdica Sur SAB and Cydsa SAB de 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.