Correlation Between Redsense Medical and Goodbye Kansas

Can any of the company-specific risk be diversified away by investing in both Redsense Medical and Goodbye Kansas 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 Goodbye Kansas 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 Goodbye Kansas Group, you can compare the effects of market volatilities on Redsense Medical and Goodbye Kansas 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 Goodbye Kansas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Redsense Medical and Goodbye Kansas.

Diversification Opportunities for Redsense Medical and Goodbye Kansas

0.01

Correlation Coefficient

Redsense Medical  Goodbye Kansas

Significant diversification

The 3 months correlation between Redsense and Goodbye is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Redsense Medical AB and Goodbye Kansas Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodbye Kansas Group 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 Goodbye Kansas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodbye Kansas Group has no effect on the direction of Redsense Medical i.e., Redsense Medical and Goodbye Kansas go up and down completely randomly.

Pair Corralation between Redsense Medical and Goodbye Kansas

Assuming the 90 days trading horizon Redsense Medical is expected to generate 1.7 times less return on investment than Goodbye Kansas. But when comparing it to its historical volatility, Redsense Medical AB is 1.37 times less risky than Goodbye Kansas. It trades about 0.03 of its potential returns per unit of risk. Goodbye Kansas Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  145.00  in Goodbye Kansas Group on October 12, 2024 and sell it today you would earn a total of  2.00  from holding Goodbye Kansas Group or generate 1.38% return on investment over 90 days.

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

Redsense Medical AB  vs.  Goodbye Kansas Group

Redsense Medical

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Redsense Medical AB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Redsense Medical may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Goodbye Kansas Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Goodbye Kansas Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward-looking signals, Goodbye Kansas may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Redsense Medical and Goodbye Kansas

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

The idea behind Redsense Medical AB and Goodbye Kansas Group 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.