Correlation Between Mentice AB and Chordate Medical

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

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

Diversification Opportunities for Mentice AB and Chordate Medical

0.66

Correlation Coefficient

Mentice AB  Chordate Medical

Poor diversification

The 3 months correlation between Mentice and Chordate is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Mentice AB and Chordate Medical Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chordate Medical Holding and Mentice AB 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 Mentice AB are associated (or correlated) with Chordate Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chordate Medical Holding has no effect on the direction of Mentice AB i.e., Mentice AB and Chordate Medical go up and down completely randomly.

Pair Corralation between Mentice AB and Chordate Medical

Assuming the 90 days trading horizon Mentice AB is expected to generate 0.97 times more return on investment than Chordate Medical. However, Mentice AB is 1.03 times less risky than Chordate Medical. It trades about -0.07 of its potential returns per unit of risk. Chordate Medical Holding is currently generating about -0.58 per unit of risk. If you would invest  2,910  in Mentice AB on September 23, 2024 and sell it today you would lose (410.00) from holding Mentice AB or give up 14.09% of portfolio value over 90 days.

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

Mentice AB  vs.  Chordate Medical Holding

Mentice AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mentice AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Chordate Medical Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chordate Medical Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Mentice AB and Chordate Medical

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

The idea behind Mentice AB and Chordate Medical Holding 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.