Correlation Between Milestone Scientific and Coloplast A/S

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

By analyzing existing cross correlation between Milestone Scientific and Coloplast AS, you can compare the effects of market volatilities on Milestone Scientific and Coloplast A/S 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 Milestone Scientific with a short position of Coloplast A/S. Check out your portfolio center. Please also check ongoing floating volatility patterns of Milestone Scientific and Coloplast A/S.

Diversification Opportunities for Milestone Scientific and Coloplast A/S

0.58

Correlation Coefficient

Milestone Scientific  Coloplast A/S

Very weak diversification

The 3 months correlation between Milestone and Coloplast is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Milestone Scientific and Coloplast AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coloplast A/S and Milestone Scientific 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 Milestone Scientific are associated (or correlated) with Coloplast A/S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coloplast A/S has no effect on the direction of Milestone Scientific i.e., Milestone Scientific and Coloplast A/S go up and down completely randomly.

Pair Corralation between Milestone Scientific and Coloplast A/S

Given the investment horizon of 90 days Milestone Scientific is expected to generate 3.11 times more return on investment than Coloplast A/S. However, Milestone Scientific is 3.11 times more volatile than Coloplast AS. It trades about 0.02 of its potential returns per unit of risk. Coloplast AS is currently generating about 0.01 per unit of risk. If you would invest  101.00  in Milestone Scientific on September 3, 2024 and sell it today you would lose (2.00) from holding Milestone Scientific or give up 1.98% of portfolio value over 90 days.

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

Milestone Scientific  vs.  Coloplast AS

Milestone Scientific

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Milestone Scientific are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Milestone Scientific is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Coloplast A/S

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Coloplast AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, Coloplast A/S is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Milestone Scientific and Coloplast A/S

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

The idea behind Milestone Scientific and Coloplast AS 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.