Correlation Between Swedencare Publ and Mendus AB

Can any of the company-specific risk be diversified away by investing in both Swedencare Publ and Mendus AB 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 Swedencare Publ and Mendus AB into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Swedencare publ AB and Mendus AB, you can compare the effects of market volatilities on Swedencare Publ and Mendus AB 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 Swedencare Publ with a short position of Mendus AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swedencare Publ and Mendus AB.

Diversification Opportunities for Swedencare Publ and Mendus AB

0.31

Correlation Coefficient

Swedencare Publ  Mendus AB

Weak diversification

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

Pair Corralation between Swedencare Publ and Mendus AB

Assuming the 90 days trading horizon Swedencare publ AB is expected to under-perform the Mendus AB. But the stock apears to be less risky and, when comparing its historical volatility, Swedencare publ AB is 1.53 times less risky than Mendus AB. The stock trades about -0.09 of its potential returns per unit of risk. The Mendus AB is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  889.00  in Mendus AB on December 2, 2024 and sell it today you would lose (93.00) from holding Mendus AB or give up 10.46% of portfolio value over 90 days.

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

Swedencare publ AB  vs.  Mendus AB

Swedencare publ AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Swedencare publ AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Mendus AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mendus AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Swedencare Publ and Mendus AB

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

The idea behind Swedencare publ AB and Mendus 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.