Correlation Between Sedana Medical and Paxman AB

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

Diversification Opportunities for Sedana Medical and Paxman AB

-0.85

Correlation Coefficient

Sedana Medical  Paxman AB

Pay attention - limited upside

The 3 months correlation between Sedana and Paxman is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Sedana Medical AB and Paxman AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paxman 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 Paxman AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paxman AB has no effect on the direction of Sedana Medical i.e., Sedana Medical and Paxman AB go up and down completely randomly.

Pair Corralation between Sedana Medical and Paxman AB

Assuming the 90 days trading horizon Sedana Medical AB is expected to under-perform the Paxman AB. In addition to that, Sedana Medical is 1.8 times more volatile than Paxman AB. It trades about -0.07 of its total potential returns per unit of risk. Paxman AB is currently generating about 0.07 per unit of volatility. If you would invest  5,580  in Paxman AB on September 13, 2024 and sell it today you would earn a total of  720.00  from holding Paxman AB or generate 12.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Sedana Medical AB  vs.  Paxman 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 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.

Paxman AB

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Paxman AB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Paxman AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sedana Medical and Paxman AB

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

The idea behind Sedana Medical AB and Paxman 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 Commodity Directory module to find actively traded commodities issued by global exchanges.