Correlation Between Sedana Medical and MAG Interactive

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

Diversification Opportunities for Sedana Medical and MAG Interactive

0.15

Correlation Coefficient

Sedana Medical  MAG Interactive

Average diversification

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

Pair Corralation between Sedana Medical and MAG Interactive

Assuming the 90 days trading horizon Sedana Medical AB is expected to generate 1.71 times more return on investment than MAG Interactive. However, Sedana Medical is 1.71 times more volatile than MAG Interactive AB. It trades about 0.02 of its potential returns per unit of risk. MAG Interactive AB is currently generating about -0.06 per unit of risk. If you would invest  2,202  in Sedana Medical AB on September 26, 2024 and sell it today you would lose (212.00) from holding Sedana Medical AB or give up 9.63% of portfolio value over 90 days.

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

Sedana Medical AB  vs.  MAG Interactive AB

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 somewhat strong fundamental indicators, Sedana Medical is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

MAG Interactive AB

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MAG Interactive AB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, MAG Interactive unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sedana Medical and MAG Interactive

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

The idea behind Sedana Medical AB and MAG Interactive 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 Global Correlations module to find global opportunities by holding instruments from different markets.