Correlation Between Redsense Medical and White Pearl

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

Diversification Opportunities for Redsense Medical and White Pearl

0.15

Correlation Coefficient

Redsense Medical  White Pearl

Average diversification

The 3 months correlation between Redsense and White is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Redsense Medical AB and White Pearl Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on White Pearl 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 White Pearl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of White Pearl Technology has no effect on the direction of Redsense Medical i.e., Redsense Medical and White Pearl go up and down completely randomly.

Pair Corralation between Redsense Medical and White Pearl

Assuming the 90 days trading horizon Redsense Medical AB is expected to under-perform the White Pearl. But the stock apears to be less risky and, when comparing its historical volatility, Redsense Medical AB is 1.07 times less risky than White Pearl. The stock trades about 0.0 of its potential returns per unit of risk. The White Pearl Technology is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  600.00  in White Pearl Technology on December 25, 2024 and sell it today you would earn a total of  138.00  from holding White Pearl Technology or generate 23.0% 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.  White Pearl Technology

Redsense Medical

Risk-Adjusted Performance

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.

White Pearl Technology

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in White Pearl Technology are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, White Pearl sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Redsense Medical and White Pearl

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

The idea behind Redsense Medical AB and White Pearl Technology 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.