Correlation Between Sedana Medical and Xvivo Perfusion

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

Diversification Opportunities for Sedana Medical and Xvivo Perfusion

0.89

Correlation Coefficient

Sedana Medical  Xvivo Perfusion

Very poor diversification

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

Pair Corralation between Sedana Medical and Xvivo Perfusion

Assuming the 90 days trading horizon Sedana Medical is expected to generate 3.74 times less return on investment than Xvivo Perfusion. In addition to that, Sedana Medical is 1.77 times more volatile than Xvivo Perfusion AB. It trades about 0.01 of its total potential returns per unit of risk. Xvivo Perfusion AB is currently generating about 0.06 per unit of volatility. If you would invest  38,750  in Xvivo Perfusion AB on September 24, 2024 and sell it today you would earn a total of  7,900  from holding Xvivo Perfusion AB or generate 20.39% return on investment over 90 days.

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

Sedana Medical AB  vs.  Xvivo Perfusion 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 latest uncertain performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Xvivo Perfusion AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xvivo Perfusion AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Xvivo Perfusion is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Sedana Medical and Xvivo Perfusion

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

The idea behind Sedana Medical AB and Xvivo Perfusion 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.

Check out your portfolio center.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.