Correlation Between Diamyd Medical and ADHI KARYA

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

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

Diversification Opportunities for Diamyd Medical and ADHI KARYA

0.48

Correlation Coefficient

Diamyd Medical  ADHI KARYA

Very weak diversification

The 3 months correlation between Diamyd and ADHI is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Diamyd Medical AB and ADHI KARYA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADHI KARYA and Diamyd 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 Diamyd Medical AB are associated (or correlated) with ADHI KARYA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADHI KARYA has no effect on the direction of Diamyd Medical i.e., Diamyd Medical and ADHI KARYA go up and down completely randomly.

Pair Corralation between Diamyd Medical and ADHI KARYA

Assuming the 90 days horizon Diamyd Medical AB is expected to under-perform the ADHI KARYA. But the stock apears to be less risky and, when comparing its historical volatility, Diamyd Medical AB is 2.42 times less risky than ADHI KARYA. The stock trades about -0.04 of its potential returns per unit of risk. The ADHI KARYA is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1.40  in ADHI KARYA on September 4, 2024 and sell it today you would lose (0.35) from holding ADHI KARYA or give up 25.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Diamyd Medical AB  vs.  ADHI KARYA

Diamyd Medical AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Diamyd Medical AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

ADHI KARYA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ADHI KARYA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, ADHI KARYA is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Diamyd Medical and ADHI KARYA

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

The idea behind Diamyd Medical AB and ADHI KARYA 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.