Correlation Between Redsense Medical and Surgical Science

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

Diversification Opportunities for Redsense Medical and Surgical Science

-0.31

Correlation Coefficient

Redsense Medical  Surgical Science

Very good diversification

The 3 months correlation between Redsense and Surgical is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Redsense Medical AB and Surgical Science Sweden in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Surgical Science Sweden 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 Surgical Science. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Surgical Science Sweden has no effect on the direction of Redsense Medical i.e., Redsense Medical and Surgical Science go up and down completely randomly.

Pair Corralation between Redsense Medical and Surgical Science

Assuming the 90 days trading horizon Redsense Medical AB is expected to generate 1.78 times more return on investment than Surgical Science. However, Redsense Medical is 1.78 times more volatile than Surgical Science Sweden. It trades about 0.02 of its potential returns per unit of risk. Surgical Science Sweden is currently generating about -0.01 per unit of risk. If you would invest  714.00  in Redsense Medical AB on October 7, 2024 and sell it today you would lose (14.00) from holding Redsense Medical AB or give up 1.96% of portfolio value over 90 days.

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

Redsense Medical AB  vs.  Surgical Science Sweden

Redsense Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Redsense Medical AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Redsense Medical is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Surgical Science Sweden

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Surgical Science Sweden are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Surgical Science unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Redsense Medical and Surgical Science

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

The idea behind Redsense Medical AB and Surgical Science Sweden 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.