Correlation Between BIO UV and Medincell

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

By analyzing existing cross correlation between BIO UV Group and Medincell SA, you can compare the effects of market volatilities on BIO UV and Medincell 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 BIO UV with a short position of Medincell. Check out your portfolio center. Please also check ongoing floating volatility patterns of BIO UV and Medincell.

Diversification Opportunities for BIO UV and Medincell

-0.64

Correlation Coefficient

BIO UV  Medincell

Excellent diversification

The 3 months correlation between BIO and Medincell is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding BIO UV Group and Medincell SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medincell SA and BIO UV 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 BIO UV Group are associated (or correlated) with Medincell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medincell SA has no effect on the direction of BIO UV i.e., BIO UV and Medincell go up and down completely randomly.

Pair Corralation between BIO UV and Medincell

Assuming the 90 days trading horizon BIO UV Group is expected to generate 1.01 times more return on investment than Medincell. However, BIO UV is 1.01 times more volatile than Medincell SA. It trades about 0.05 of its potential returns per unit of risk. Medincell SA is currently generating about 0.05 per unit of risk. If you would invest  198.00  in BIO UV Group on September 28, 2024 and sell it today you would earn a total of  15.00  from holding BIO UV Group or generate 7.58% return on investment over 90 days.

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

BIO UV Group  vs.  Medincell SA

BIO UV Group

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BIO UV Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, BIO UV may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Medincell SA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Medincell SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Medincell may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with BIO UV and Medincell

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

The idea behind BIO UV Group and Medincell 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.

Check out your portfolio center.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.