Correlation Between Medical Developments and Hansen Technologies

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

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

Diversification Opportunities for Medical Developments and Hansen Technologies

0.24

Correlation Coefficient

Medical Developments  Hansen Technologies

Modest diversification

The 3 months correlation between Medical and Hansen is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Medical Developments Internati and Hansen Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hansen Technologies and Medical Developments 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 Developments International are associated (or correlated) with Hansen Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hansen Technologies has no effect on the direction of Medical Developments i.e., Medical Developments and Hansen Technologies go up and down completely randomly.

Pair Corralation between Medical Developments and Hansen Technologies

Assuming the 90 days trading horizon Medical Developments International is expected to generate 5.98 times more return on investment than Hansen Technologies. However, Medical Developments is 5.98 times more volatile than Hansen Technologies. It trades about 0.09 of its potential returns per unit of risk. Hansen Technologies is currently generating about -0.09 per unit of risk. If you would invest  41.00  in Medical Developments International on December 30, 2024 and sell it today you would earn a total of  13.00  from holding Medical Developments International or generate 31.71% return on investment over 90 days.

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

Medical Developments Internati  vs.  Hansen Technologies

Medical Developments

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Medical Developments International are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Medical Developments unveiled solid returns over the last few months and may actually be approaching a breakup point.

Hansen Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hansen Technologies 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.

Pair Trading with Medical Developments and Hansen Technologies

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

The idea behind Medical Developments International and Hansen Technologies 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.