Correlation Between Swedencare Publ and Sedana Medical

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

Diversification Opportunities for Swedencare Publ and Sedana Medical

-0.62

Correlation Coefficient

Swedencare Publ  Sedana Medical

Excellent diversification

The 3 months correlation between Swedencare and Sedana is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Swedencare publ AB and Sedana Medical AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sedana Medical 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 Sedana Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sedana Medical AB has no effect on the direction of Swedencare Publ i.e., Swedencare Publ and Sedana Medical go up and down completely randomly.

Pair Corralation between Swedencare Publ and Sedana Medical

Assuming the 90 days trading horizon Swedencare publ AB is expected to generate 0.34 times more return on investment than Sedana Medical. However, Swedencare publ AB is 2.93 times less risky than Sedana Medical. It trades about 0.13 of its potential returns per unit of risk. Sedana Medical AB is currently generating about -0.08 per unit of risk. If you would invest  4,592  in Swedencare publ AB on September 12, 2024 and sell it today you would earn a total of  783.00  from holding Swedencare publ AB or generate 17.05% return on investment over 90 days.

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

Swedencare publ AB  vs.  Sedana Medical AB

Swedencare publ AB

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Swedencare publ AB are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental indicators, Swedencare Publ sustained solid returns over the last few months and may actually be approaching a breakup point.

Sedana Medical AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sedana Medical 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Swedencare Publ and Sedana Medical

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

The idea behind Swedencare publ AB and Sedana Medical 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.