Correlation Between Medhelp Care and Surgical Science

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

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

Diversification Opportunities for Medhelp Care and Surgical Science

0.74

Correlation Coefficient

Medhelp Care  Surgical Science

Poor diversification

The 3 months correlation between Medhelp and Surgical is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Medhelp Care AB and Surgical Science Sweden in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Surgical Science Sweden and Medhelp Care 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 Medhelp Care AB are associated (or correlated) with Surgical Science. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Surgical Science Sweden has no effect on the direction of Medhelp Care i.e., Medhelp Care and Surgical Science go up and down completely randomly.

Pair Corralation between Medhelp Care and Surgical Science

Assuming the 90 days trading horizon Medhelp Care is expected to generate 1.77 times less return on investment than Surgical Science. In addition to that, Medhelp Care is 1.02 times more volatile than Surgical Science Sweden. It trades about 0.07 of its total potential returns per unit of risk. Surgical Science Sweden is currently generating about 0.12 per unit of volatility. If you would invest  12,000  in Surgical Science Sweden on September 2, 2024 and sell it today you would earn a total of  2,820  from holding Surgical Science Sweden or generate 23.5% return on investment over 90 days.

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

Medhelp Care AB  vs.  Surgical Science Sweden

Medhelp Care AB

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Medhelp Care AB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental indicators, Medhelp Care sustained solid returns over the last few months and may actually be approaching a breakup point.

Surgical Science Sweden

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Surgical Science Sweden are ranked lower than 9 (%) 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.

Pair Trading with Medhelp Care and Surgical Science

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

The idea behind Medhelp Care AB and Surgical Science Sweden 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.