Correlation Between RaySearch Laboratories and Elekta AB

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

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

Diversification Opportunities for RaySearch Laboratories and Elekta AB

-0.58

Correlation Coefficient

RaySearch Laboratories  Elekta AB

Excellent diversification

The 3 months correlation between RaySearch and Elekta is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding RaySearch Laboratories AB and Elekta AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elekta AB and RaySearch Laboratories 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 RaySearch Laboratories AB are associated (or correlated) with Elekta AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elekta AB has no effect on the direction of RaySearch Laboratories i.e., RaySearch Laboratories and Elekta AB go up and down completely randomly.

Pair Corralation between RaySearch Laboratories and Elekta AB

Assuming the 90 days trading horizon RaySearch Laboratories AB is expected to generate 1.72 times more return on investment than Elekta AB. However, RaySearch Laboratories is 1.72 times more volatile than Elekta AB. It trades about 0.18 of its potential returns per unit of risk. Elekta AB is currently generating about -0.03 per unit of risk. If you would invest  15,240  in RaySearch Laboratories AB on September 2, 2024 and sell it today you would earn a total of  5,560  from holding RaySearch Laboratories AB or generate 36.48% return on investment over 90 days.

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

RaySearch Laboratories AB  vs.  Elekta AB

RaySearch Laboratories

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in RaySearch Laboratories AB are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, RaySearch Laboratories unveiled solid returns over the last few months and may actually be approaching a breakup point.

Elekta AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Elekta AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Elekta AB is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with RaySearch Laboratories and Elekta AB

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

The idea behind RaySearch Laboratories AB and Elekta AB 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.