Correlation Between Sequana Medical and Campine

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

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

Diversification Opportunities for Sequana Medical and Campine

-0.49

Correlation Coefficient

Sequana Medical  Campine

Very good diversification

The 3 months correlation between Sequana and Campine is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Sequana Medical NV and Campine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Campine and Sequana 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 Sequana Medical NV are associated (or correlated) with Campine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Campine has no effect on the direction of Sequana Medical i.e., Sequana Medical and Campine go up and down completely randomly.

Pair Corralation between Sequana Medical and Campine

Assuming the 90 days trading horizon Sequana Medical is expected to generate 20.64 times less return on investment than Campine. In addition to that, Sequana Medical is 5.61 times more volatile than Campine. It trades about 0.0 of its total potential returns per unit of risk. Campine is currently generating about 0.21 per unit of volatility. If you would invest  8,000  in Campine on September 12, 2024 and sell it today you would earn a total of  1,900  from holding Campine or generate 23.75% return on investment over 90 days.

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

Sequana Medical NV  vs.  Campine

Sequana Medical NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sequana Medical NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Sequana Medical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Campine

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Campine are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Campine reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sequana Medical and Campine

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

The idea behind Sequana Medical NV and Campine 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.