Correlation Between Moberg Pharma and Isofol Medical

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

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

Diversification Opportunities for Moberg Pharma and Isofol Medical

0.1

Correlation Coefficient

Moberg Pharma  Isofol Medical

Average diversification

The 3 months correlation between Moberg and Isofol is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Moberg Pharma AB and Isofol Medical AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Isofol Medical AB and Moberg Pharma 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 Moberg Pharma AB are associated (or correlated) with Isofol Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Isofol Medical AB has no effect on the direction of Moberg Pharma i.e., Moberg Pharma and Isofol Medical go up and down completely randomly.

Pair Corralation between Moberg Pharma and Isofol Medical

Assuming the 90 days trading horizon Moberg Pharma AB is expected to generate 1.9 times more return on investment than Isofol Medical. However, Moberg Pharma is 1.9 times more volatile than Isofol Medical AB. It trades about 0.04 of its potential returns per unit of risk. Isofol Medical AB is currently generating about -0.2 per unit of risk. If you would invest  1,092  in Moberg Pharma AB on September 23, 2024 and sell it today you would lose (34.00) from holding Moberg Pharma AB or give up 3.11% of portfolio value over 90 days.

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

Moberg Pharma AB  vs.  Isofol Medical AB

Moberg Pharma AB

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Moberg Pharma AB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental drivers, Moberg Pharma unveiled solid returns over the last few months and may actually be approaching a breakup point.

Isofol Medical AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Isofol Medical AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Isofol Medical is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Moberg Pharma and Isofol Medical

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

The idea behind Moberg Pharma AB and Isofol Medical AB 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.