Correlation Between Societatea Nationala and Med Life

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

By analyzing existing cross correlation between Societatea Nationala de and Med Life SA, you can compare the effects of market volatilities on Societatea Nationala and Med Life 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 Societatea Nationala with a short position of Med Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Societatea Nationala and Med Life.

Diversification Opportunities for Societatea Nationala and Med Life

0.49

Correlation Coefficient

Societatea Nationala  Med Life

Very weak diversification

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

Pair Corralation between Societatea Nationala and Med Life

Assuming the 90 days trading horizon Societatea Nationala de is expected to under-perform the Med Life. But the stock apears to be less risky and, when comparing its historical volatility, Societatea Nationala de is 1.54 times less risky than Med Life. The stock trades about -0.03 of its potential returns per unit of risk. The Med Life SA is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  595.00  in Med Life SA on October 25, 2024 and sell it today you would lose (11.00) from holding Med Life SA or give up 1.85% of portfolio value over 90 days.

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

Societatea Nationala de  vs.  Med Life SA

Societatea Nationala

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Societatea Nationala de has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Societatea Nationala is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Med Life SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Med Life SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Med Life is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Societatea Nationala and Med Life

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

The idea behind Societatea Nationala de and Med Life 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.

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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.