Correlation Between Surgical Science and Paxman AB

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

By analyzing existing cross correlation between Surgical Science Sweden and Paxman AB, you can compare the effects of market volatilities on Surgical Science and Paxman AB 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 Surgical Science with a short position of Paxman AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Surgical Science and Paxman AB.

Diversification Opportunities for Surgical Science and Paxman AB

0.57

Correlation Coefficient

Surgical Science  Paxman AB

Very weak diversification

The 3 months correlation between Surgical and Paxman is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Surgical Science Sweden and Paxman AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paxman AB and Surgical Science 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 Surgical Science Sweden are associated (or correlated) with Paxman AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paxman AB has no effect on the direction of Surgical Science i.e., Surgical Science and Paxman AB go up and down completely randomly.

Pair Corralation between Surgical Science and Paxman AB

Assuming the 90 days trading horizon Surgical Science is expected to generate 2.78 times less return on investment than Paxman AB. In addition to that, Surgical Science is 1.13 times more volatile than Paxman AB. It trades about 0.01 of its total potential returns per unit of risk. Paxman AB is currently generating about 0.04 per unit of volatility. If you would invest  4,270  in Paxman AB on September 13, 2024 and sell it today you would earn a total of  2,110  from holding Paxman AB or generate 49.41% return on investment over 90 days.

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

Surgical Science Sweden  vs.  Paxman AB

Surgical Science Sweden

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Surgical Science Sweden are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Surgical Science unveiled solid returns over the last few months and may actually be approaching a breakup point.

Paxman AB

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Paxman AB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Paxman AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Surgical Science and Paxman AB

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

The idea behind Surgical Science Sweden and Paxman AB 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.