Correlation Between Neola Medical and Xvivo Perfusion

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

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

Diversification Opportunities for Neola Medical and Xvivo Perfusion

-0.23

Correlation Coefficient

Neola Medical  Xvivo Perfusion

Very good diversification

The 3 months correlation between Neola and Xvivo is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Neola Medical AB and Xvivo Perfusion AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xvivo Perfusion AB and Neola Medical 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 Neola Medical AB are associated (or correlated) with Xvivo Perfusion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xvivo Perfusion AB has no effect on the direction of Neola Medical i.e., Neola Medical and Xvivo Perfusion go up and down completely randomly.

Pair Corralation between Neola Medical and Xvivo Perfusion

Assuming the 90 days trading horizon Neola Medical AB is expected to generate 1.77 times more return on investment than Xvivo Perfusion. However, Neola Medical is 1.77 times more volatile than Xvivo Perfusion AB. It trades about 0.04 of its potential returns per unit of risk. Xvivo Perfusion AB is currently generating about -0.05 per unit of risk. If you would invest  220.00  in Neola Medical AB on December 4, 2024 and sell it today you would earn a total of  14.00  from holding Neola Medical AB or generate 6.36% return on investment over 90 days.

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

Neola Medical AB  vs.  Xvivo Perfusion AB

Neola Medical AB

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Neola Medical AB are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Neola Medical may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Xvivo Perfusion AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Xvivo Perfusion 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.

Pair Trading with Neola Medical and Xvivo Perfusion

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

The idea behind Neola Medical AB and Xvivo Perfusion 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.