Correlation Between Genovis AB and Isofol Medical

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

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

Diversification Opportunities for Genovis AB and Isofol Medical

-0.41

Correlation Coefficient

Genovis AB  Isofol Medical

Very good diversification

The 3 months correlation between Genovis and Isofol is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Genovis AB and Isofol Medical AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Isofol Medical AB and Genovis AB 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 Genovis AB are associated (or correlated) with Isofol Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Isofol Medical AB has no effect on the direction of Genovis AB i.e., Genovis AB and Isofol Medical go up and down completely randomly.

Pair Corralation between Genovis AB and Isofol Medical

Assuming the 90 days trading horizon Genovis AB is expected to generate 0.77 times more return on investment than Isofol Medical. However, Genovis AB is 1.29 times less risky than Isofol Medical. It trades about 0.06 of its potential returns per unit of risk. Isofol Medical AB is currently generating about -0.01 per unit of risk. If you would invest  2,270  in Genovis AB on September 12, 2024 and sell it today you would earn a total of  255.00  from holding Genovis AB or generate 11.23% return on investment over 90 days.

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

Genovis AB  vs.  Isofol Medical AB

Genovis AB

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Genovis AB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Genovis AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

Isofol Medical AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Isofol Medical AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Isofol Medical is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Genovis AB and Isofol Medical

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

The idea behind Genovis AB and Isofol Medical 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.