Correlation Between Scandinavian Medical and Carnegie Wealth

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

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

Diversification Opportunities for Scandinavian Medical and Carnegie Wealth

0.08

Correlation Coefficient

Scandinavian Medical  Carnegie Wealth

Significant diversification

The 3 months correlation between Scandinavian and Carnegie is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Medical Solutions and Carnegie Wealth Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carnegie Wealth Mana and Scandinavian 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 Scandinavian Medical Solutions are associated (or correlated) with Carnegie Wealth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carnegie Wealth Mana has no effect on the direction of Scandinavian Medical i.e., Scandinavian Medical and Carnegie Wealth go up and down completely randomly.

Pair Corralation between Scandinavian Medical and Carnegie Wealth

Assuming the 90 days trading horizon Scandinavian Medical Solutions is expected to under-perform the Carnegie Wealth. In addition to that, Scandinavian Medical is 3.67 times more volatile than Carnegie Wealth Management. It trades about -0.06 of its total potential returns per unit of risk. Carnegie Wealth Management is currently generating about 0.15 per unit of volatility. If you would invest  12,610  in Carnegie Wealth Management on October 26, 2024 and sell it today you would earn a total of  290.00  from holding Carnegie Wealth Management or generate 2.3% return on investment over 90 days.

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

Scandinavian Medical Solutions  vs.  Carnegie Wealth Management

Scandinavian Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Scandinavian Medical Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Carnegie Wealth Mana

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Scandinavian Medical and Carnegie Wealth

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

The idea behind Scandinavian Medical Solutions and Carnegie Wealth Management 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.