Correlation Between Medical Packaging and Edita Food

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

By analyzing existing cross correlation between Medical Packaging and Edita Food Industries, you can compare the effects of market volatilities on Medical Packaging and Edita Food 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 Medical Packaging with a short position of Edita Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medical Packaging and Edita Food.

Diversification Opportunities for Medical Packaging and Edita Food

0.55

Correlation Coefficient

Medical Packaging  Edita Food

Very weak diversification

The 3 months correlation between Medical and Edita is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Medical Packaging and Edita Food Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edita Food Industries and Medical Packaging 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 Medical Packaging are associated (or correlated) with Edita Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edita Food Industries has no effect on the direction of Medical Packaging i.e., Medical Packaging and Edita Food go up and down completely randomly.

Pair Corralation between Medical Packaging and Edita Food

Assuming the 90 days trading horizon Medical Packaging is expected to generate 1.4 times less return on investment than Edita Food. In addition to that, Medical Packaging is 1.15 times more volatile than Edita Food Industries. It trades about 0.06 of its total potential returns per unit of risk. Edita Food Industries is currently generating about 0.09 per unit of volatility. If you would invest  2,765  in Edita Food Industries on October 24, 2024 and sell it today you would earn a total of  66.00  from holding Edita Food Industries or generate 2.39% return on investment over 90 days.

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

Medical Packaging  vs.  Edita Food Industries

Medical Packaging

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Medical Packaging are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Medical Packaging may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Edita Food Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Edita Food Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Medical Packaging and Edita Food

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

The idea behind Medical Packaging and Edita Food Industries 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.