Correlation Between Onward Medical and Home Invest

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

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

Diversification Opportunities for Onward Medical and Home Invest

0.48

Correlation Coefficient

Onward Medical  Home Invest

Very weak diversification

The 3 months correlation between Onward and Home is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Onward Medical NV and Home Invest Belgium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Invest Belgium and Onward Medical 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 Onward Medical NV are associated (or correlated) with Home Invest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Invest Belgium has no effect on the direction of Onward Medical i.e., Onward Medical and Home Invest go up and down completely randomly.

Pair Corralation between Onward Medical and Home Invest

Assuming the 90 days trading horizon Onward Medical NV is expected to generate 1.65 times more return on investment than Home Invest. However, Onward Medical is 1.65 times more volatile than Home Invest Belgium. It trades about 0.19 of its potential returns per unit of risk. Home Invest Belgium is currently generating about 0.11 per unit of risk. If you would invest  475.00  in Onward Medical NV on September 26, 2024 and sell it today you would earn a total of  59.00  from holding Onward Medical NV or generate 12.42% return on investment over 90 days.

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

Onward Medical NV  vs.  Home Invest Belgium

Onward Medical NV

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Onward Medical NV are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Onward Medical may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Home Invest Belgium

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Home Invest Belgium has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Onward Medical and Home Invest

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

The idea behind Onward Medical NV and Home Invest Belgium 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.