Correlation Between Speed Medical and Edita Food

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

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

Diversification Opportunities for Speed Medical and Edita Food

-0.19

Correlation Coefficient

Speed Medical  Edita Food

Good diversification

The 3 months correlation between Speed and Edita is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Speed Medical and Edita Food Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edita Food Industries and Speed 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 Speed Medical are associated (or correlated) with Edita Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edita Food Industries has no effect on the direction of Speed Medical i.e., Speed Medical and Edita Food go up and down completely randomly.

Pair Corralation between Speed Medical and Edita Food

Assuming the 90 days trading horizon Speed Medical is expected to generate 1.38 times less return on investment than Edita Food. But when comparing it to its historical volatility, Speed Medical is 1.28 times less risky than Edita Food. It trades about 0.03 of its potential returns per unit of risk. Edita Food Industries is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,793  in Edita Food Industries on September 17, 2024 and sell it today you would earn a total of  97.00  from holding Edita Food Industries or generate 3.47% return on investment over 90 days.

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

Speed Medical  vs.  Edita Food Industries

Speed Medical

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Speed Medical are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Speed Medical is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Edita Food Industries

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Edita Food Industries are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Edita Food may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Speed Medical and Edita Food

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

The idea behind Speed Medical and Edita Food Industries 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .