Correlation Between Monks Investment and Surgical Science

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

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

Diversification Opportunities for Monks Investment and Surgical Science

0.8

Correlation Coefficient

Monks Investment  Surgical Science

Very poor diversification

The 3 months correlation between Monks and Surgical is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Monks Investment Trust 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 Monks Investment 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 Monks Investment Trust 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 Monks Investment i.e., Monks Investment and Surgical Science go up and down completely randomly.

Pair Corralation between Monks Investment and Surgical Science

Assuming the 90 days trading horizon Monks Investment is expected to generate 2.2 times less return on investment than Surgical Science. But when comparing it to its historical volatility, Monks Investment Trust is 3.49 times less risky than Surgical Science. It trades about 0.2 of its potential returns per unit of risk. Surgical Science Sweden is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  12,140  in Surgical Science Sweden on September 13, 2024 and sell it today you would earn a total of  2,610  from holding Surgical Science Sweden or generate 21.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	96.88%
Values	Daily Returns

Monks Investment Trust  vs.  Surgical Science Sweden

Monks Investment Trust

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Monks Investment Trust are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Monks Investment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 Monks Investment and Surgical Science

The main advantage of trading using opposite Monks Investment and Surgical Science positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monks Investment 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 Monks Investment Trust 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.