Correlation Between Redsense Medical and Upsales Technology

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

Diversification Opportunities for Redsense Medical and Upsales Technology

0.2

Correlation Coefficient

Redsense Medical  Upsales Technology

Modest diversification

The 3 months correlation between Redsense and Upsales is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Redsense Medical AB and Upsales Technology AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Upsales Technology 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 Upsales Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Upsales Technology has no effect on the direction of Redsense Medical i.e., Redsense Medical and Upsales Technology go up and down completely randomly.

Pair Corralation between Redsense Medical and Upsales Technology

Assuming the 90 days trading horizon Redsense Medical AB is expected to under-perform the Upsales Technology. But the stock apears to be less risky and, when comparing its historical volatility, Redsense Medical AB is 1.21 times less risky than Upsales Technology. The stock trades about -0.21 of its potential returns per unit of risk. The Upsales Technology AB is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  3,000  in Upsales Technology AB on October 24, 2024 and sell it today you would earn a total of  240.00  from holding Upsales Technology AB or generate 8.0% return on investment over 90 days.

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

Redsense Medical AB  vs.  Upsales Technology AB

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 current stock price uproar, may contribute to short-horizon losses for the private investors.

Upsales Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Upsales Technology AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Upsales Technology is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Redsense Medical and Upsales Technology

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

The idea behind Redsense Medical AB and Upsales Technology 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.

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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.