Correlation Between RaySearch Laboratories and Boule Diagnostics

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

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

Diversification Opportunities for RaySearch Laboratories and Boule Diagnostics

-0.14

Correlation Coefficient

RaySearch Laboratories  Boule Diagnostics

Good diversification

The 3 months correlation between RaySearch and Boule is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding RaySearch Laboratories AB and Boule Diagnostics AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boule Diagnostics and RaySearch Laboratories 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 RaySearch Laboratories AB are associated (or correlated) with Boule Diagnostics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boule Diagnostics has no effect on the direction of RaySearch Laboratories i.e., RaySearch Laboratories and Boule Diagnostics go up and down completely randomly.

Pair Corralation between RaySearch Laboratories and Boule Diagnostics

Assuming the 90 days trading horizon RaySearch Laboratories AB is expected to generate 0.69 times more return on investment than Boule Diagnostics. However, RaySearch Laboratories AB is 1.45 times less risky than Boule Diagnostics. It trades about 0.12 of its potential returns per unit of risk. Boule Diagnostics AB is currently generating about 0.02 per unit of risk. If you would invest  16,460  in RaySearch Laboratories AB on September 12, 2024 and sell it today you would earn a total of  3,840  from holding RaySearch Laboratories AB or generate 23.33% return on investment over 90 days.

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

RaySearch Laboratories AB  vs.  Boule Diagnostics AB

RaySearch Laboratories

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in RaySearch Laboratories AB are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, RaySearch Laboratories unveiled solid returns over the last few months and may actually be approaching a breakup point.

Boule Diagnostics

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Boule Diagnostics AB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Boule Diagnostics is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with RaySearch Laboratories and Boule Diagnostics

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

The idea behind RaySearch Laboratories AB and Boule Diagnostics 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.