Correlation Between Saule Technologies and Medicofarma Biotech

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

By analyzing existing cross correlation between Saule Technologies SA and Medicofarma Biotech SA, you can compare the effects of market volatilities on Saule Technologies and Medicofarma Biotech 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 Saule Technologies with a short position of Medicofarma Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Saule Technologies and Medicofarma Biotech.

Diversification Opportunities for Saule Technologies and Medicofarma Biotech

-0.77

Correlation Coefficient

Saule Technologies  Medicofarma Biotech

Pay attention - limited upside

The 3 months correlation between Saule and Medicofarma is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Saule Technologies SA and Medicofarma Biotech SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medicofarma Biotech and Saule Technologies 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 Saule Technologies SA are associated (or correlated) with Medicofarma Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medicofarma Biotech has no effect on the direction of Saule Technologies i.e., Saule Technologies and Medicofarma Biotech go up and down completely randomly.

Pair Corralation between Saule Technologies and Medicofarma Biotech

Assuming the 90 days trading horizon Saule Technologies SA is expected to generate 0.75 times more return on investment than Medicofarma Biotech. However, Saule Technologies SA is 1.33 times less risky than Medicofarma Biotech. It trades about -0.01 of its potential returns per unit of risk. Medicofarma Biotech SA is currently generating about -0.03 per unit of risk. If you would invest  358.00  in Saule Technologies SA on December 2, 2024 and sell it today you would lose (145.00) from holding Saule Technologies SA or give up 40.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.37%
Values	Daily Returns

Saule Technologies SA  vs.  Medicofarma Biotech SA

Saule Technologies

Risk-Adjusted Performance

Solid

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

Medicofarma Biotech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Medicofarma Biotech SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Saule Technologies and Medicofarma Biotech

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

The idea behind Saule Technologies SA and Medicofarma Biotech SA 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.