Correlation Between OSE Pharma and Medincell

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

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

Diversification Opportunities for OSE Pharma and Medincell

-0.13

Correlation Coefficient

OSE Pharma  Medincell

Good diversification

The 3 months correlation between OSE and Medincell is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding OSE Pharma SA and Medincell SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medincell SA and OSE Pharma 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 OSE Pharma SA are associated (or correlated) with Medincell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medincell SA has no effect on the direction of OSE Pharma i.e., OSE Pharma and Medincell go up and down completely randomly.

Pair Corralation between OSE Pharma and Medincell

Assuming the 90 days trading horizon OSE Pharma SA is expected to generate 1.35 times more return on investment than Medincell. However, OSE Pharma is 1.35 times more volatile than Medincell SA. It trades about 0.09 of its potential returns per unit of risk. Medincell SA is currently generating about 0.01 per unit of risk. If you would invest  658.00  in OSE Pharma SA on September 16, 2024 and sell it today you would earn a total of  122.00  from holding OSE Pharma SA or generate 18.54% return on investment over 90 days.

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

OSE Pharma SA  vs.  Medincell SA

OSE Pharma SA

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in OSE Pharma SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, OSE Pharma sustained solid returns over the last few months and may actually be approaching a breakup point.

Medincell SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Medincell SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Medincell is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with OSE Pharma and Medincell

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

The idea behind OSE Pharma SA and Medincell SA 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.

Check out your portfolio center.

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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.