Correlation Between TEN SQUARE and Medicofarma Biotech

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

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

Diversification Opportunities for TEN SQUARE and Medicofarma Biotech

0.83

Correlation Coefficient

TEN SQUARE  Medicofarma Biotech

Very poor diversification

The 3 months correlation between TEN and Medicofarma is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding TEN SQUARE GAMES and Medicofarma Biotech SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medicofarma Biotech and TEN SQUARE 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 TEN SQUARE GAMES 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 TEN SQUARE i.e., TEN SQUARE and Medicofarma Biotech go up and down completely randomly.

Pair Corralation between TEN SQUARE and Medicofarma Biotech

Assuming the 90 days trading horizon TEN SQUARE GAMES is expected to under-perform the Medicofarma Biotech. But the stock apears to be less risky and, when comparing its historical volatility, TEN SQUARE GAMES is 2.35 times less risky than Medicofarma Biotech. The stock trades about -0.2 of its potential returns per unit of risk. The Medicofarma Biotech SA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  39.00  in Medicofarma Biotech SA on September 24, 2024 and sell it today you would earn a total of  1.00  from holding Medicofarma Biotech SA or generate 2.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.24%
Values	Daily Returns

TEN SQUARE GAMES  vs.  Medicofarma Biotech SA

TEN SQUARE GAMES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TEN SQUARE GAMES 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 January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Medicofarma Biotech

Risk-Adjusted Performance

0 of 100

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 January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with TEN SQUARE and Medicofarma Biotech

The main advantage of trading using opposite TEN SQUARE and Medicofarma Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TEN SQUARE 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 TEN SQUARE GAMES 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.

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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.