Correlation Between Redsense Medical and Flex LNG
Can any of the company-specific risk be diversified away by investing in both Redsense Medical and Flex LNG 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 Redsense Medical and Flex LNG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Redsense Medical AB and Flex LNG, you can compare the effects of market volatilities on Redsense Medical and Flex LNG 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 Redsense Medical with a short position of Flex LNG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Redsense Medical and Flex LNG.
Diversification Opportunities for Redsense Medical and Flex LNG
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Redsense and Flex is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Redsense Medical AB and Flex LNG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flex LNG and Redsense 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 Redsense Medical AB are associated (or correlated) with Flex LNG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flex LNG has no effect on the direction of Redsense Medical i.e., Redsense Medical and Flex LNG go up and down completely randomly.
Pair Corralation between Redsense Medical and Flex LNG
Assuming the 90 days trading horizon Redsense Medical AB is expected to generate 1.78 times more return on investment than Flex LNG. However, Redsense Medical is 1.78 times more volatile than Flex LNG. It trades about 0.02 of its potential returns per unit of risk. Flex LNG is currently generating about -0.04 per unit of risk. If you would invest 714.00 in Redsense Medical AB on December 4, 2024 and sell it today you would lose (4.00) from holding Redsense Medical AB or give up 0.56% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Redsense Medical AB vs. Flex LNG
Performance |
Timeline |
Redsense Medical |
Flex LNG |
Redsense Medical and Flex LNG Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Redsense Medical and Flex LNG
The main advantage of trading using opposite Redsense Medical and Flex LNG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Redsense Medical position performs unexpectedly, Flex LNG 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 Flex LNG will offset losses from the drop in Flex LNG's long position.Redsense Medical vs. Svenska Handelsbanken AB | Redsense Medical vs. Bio Works Technologies AB | Redsense Medical vs. Sdiptech AB | Redsense Medical vs. Lundin Mining |
Flex LNG vs. Invisio Communications AB | Flex LNG vs. USWE Sports AB | Flex LNG vs. Havsfrun Investment AB | Flex LNG vs. New Nordic Healthbrands |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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