Correlation Between Sedana Medical and Getinge AB

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

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

Diversification Opportunities for Sedana Medical and Getinge AB

0.89

Correlation Coefficient

Sedana Medical  Getinge AB

Very poor diversification

The 3 months correlation between Sedana and Getinge is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Sedana Medical AB and Getinge AB ser in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Getinge AB ser and Sedana 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 Sedana Medical AB are associated (or correlated) with Getinge AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Getinge AB ser has no effect on the direction of Sedana Medical i.e., Sedana Medical and Getinge AB go up and down completely randomly.

Pair Corralation between Sedana Medical and Getinge AB

Assuming the 90 days trading horizon Sedana Medical AB is expected to under-perform the Getinge AB. In addition to that, Sedana Medical is 3.27 times more volatile than Getinge AB ser. It trades about -0.13 of its total potential returns per unit of risk. Getinge AB ser is currently generating about -0.21 per unit of volatility. If you would invest  21,650  in Getinge AB ser on September 4, 2024 and sell it today you would lose (4,440) from holding Getinge AB ser or give up 20.51% of portfolio value over 90 days.

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

Sedana Medical AB  vs.  Getinge AB ser

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.

Getinge AB ser

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Getinge AB ser 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 basic 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 Sedana Medical and Getinge AB

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

The idea behind Sedana Medical AB and Getinge AB ser 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.