Correlation Between Medical Developments and Infomedia

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

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

Diversification Opportunities for Medical Developments and Infomedia

0.07

Correlation Coefficient

Medical Developments  Infomedia

Significant diversification

The 3 months correlation between Medical and Infomedia is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Medical Developments Internati and Infomedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infomedia and Medical Developments 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 Medical Developments International are associated (or correlated) with Infomedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infomedia has no effect on the direction of Medical Developments i.e., Medical Developments and Infomedia go up and down completely randomly.

Pair Corralation between Medical Developments and Infomedia

Assuming the 90 days trading horizon Medical Developments International is expected to generate 0.97 times more return on investment than Infomedia. However, Medical Developments International is 1.03 times less risky than Infomedia. It trades about -0.04 of its potential returns per unit of risk. Infomedia is currently generating about -0.12 per unit of risk. If you would invest  46.00  in Medical Developments International on September 2, 2024 and sell it today you would lose (4.00) from holding Medical Developments International or give up 8.7% of portfolio value over 90 days.

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

Medical Developments Internati  vs.  Infomedia

Medical Developments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Medical Developments International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Infomedia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Infomedia has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's primary indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Medical Developments and Infomedia

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

The idea behind Medical Developments International and Infomedia 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.