Correlation Between Promateris and Med Life

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

By analyzing existing cross correlation between Promateris SA and Med Life SA, you can compare the effects of market volatilities on Promateris and Med Life 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 Promateris with a short position of Med Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Promateris and Med Life.

Diversification Opportunities for Promateris and Med Life

0.0

Correlation Coefficient

Promateris  Med Life

Pay attention - limited upside

The 3 months correlation between Promateris and Med is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Promateris SA and Med Life SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Med Life SA and Promateris 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 Promateris SA are associated (or correlated) with Med Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Med Life SA has no effect on the direction of Promateris i.e., Promateris and Med Life go up and down completely randomly.

Pair Corralation between Promateris and Med Life

Assuming the 90 days trading horizon Promateris SA is expected to under-perform the Med Life. In addition to that, Promateris is 2.46 times more volatile than Med Life SA. It trades about -0.06 of its total potential returns per unit of risk. Med Life SA is currently generating about 0.04 per unit of volatility. If you would invest  581.00  in Med Life SA on December 21, 2024 and sell it today you would earn a total of  13.00  from holding Med Life SA or generate 2.24% return on investment over 90 days.

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

Promateris SA  vs.  Med Life SA

Promateris SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Promateris SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's essential indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Med Life SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Med Life SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Med Life is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Promateris and Med Life

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

The idea behind Promateris SA and Med Life SA 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.