Correlation Between Medistim ASA and Carasent ASA

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

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

Diversification Opportunities for Medistim ASA and Carasent ASA

-0.72

Correlation Coefficient

Medistim ASA  Carasent ASA

Pay attention - limited upside

The 3 months correlation between Medistim and Carasent is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Medistim ASA and Carasent ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carasent ASA and Medistim ASA 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 Medistim ASA are associated (or correlated) with Carasent ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carasent ASA has no effect on the direction of Medistim ASA i.e., Medistim ASA and Carasent ASA go up and down completely randomly.

Pair Corralation between Medistim ASA and Carasent ASA

Assuming the 90 days trading horizon Medistim ASA is expected to under-perform the Carasent ASA. In addition to that, Medistim ASA is 1.25 times more volatile than Carasent ASA. It trades about -0.08 of its total potential returns per unit of risk. Carasent ASA is currently generating about 0.13 per unit of volatility. If you would invest  1,710  in Carasent ASA on September 5, 2024 and sell it today you would earn a total of  320.00  from holding Carasent ASA or generate 18.71% return on investment over 90 days.

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

Medistim ASA  vs.  Carasent ASA

Medistim ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Medistim ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Carasent ASA

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Carasent ASA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Carasent ASA disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Medistim ASA and Carasent ASA

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

The idea behind Medistim ASA and Carasent ASA 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.