Correlation Between SAFETY MEDICAL and HEMOGENYX PHARMPLC

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

By analyzing existing cross correlation between SAFETY MEDICAL PROD and HEMOGENYX PHARMPLC LS 01, you can compare the effects of market volatilities on SAFETY MEDICAL and HEMOGENYX PHARMPLC 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 SAFETY MEDICAL with a short position of HEMOGENYX PHARMPLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of SAFETY MEDICAL and HEMOGENYX PHARMPLC.

Diversification Opportunities for SAFETY MEDICAL and HEMOGENYX PHARMPLC

0.23

Correlation Coefficient

SAFETY MEDICAL  HEMOGENYX PHARMPLC

Modest diversification

The 3 months correlation between SAFETY and HEMOGENYX is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding SAFETY MEDICAL PROD and HEMOGENYX PHARMPLC LS 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEMOGENYX PHARMPLC and SAFETY 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 SAFETY MEDICAL PROD are associated (or correlated) with HEMOGENYX PHARMPLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEMOGENYX PHARMPLC has no effect on the direction of SAFETY MEDICAL i.e., SAFETY MEDICAL and HEMOGENYX PHARMPLC go up and down completely randomly.

Pair Corralation between SAFETY MEDICAL and HEMOGENYX PHARMPLC

Assuming the 90 days trading horizon SAFETY MEDICAL PROD is expected to under-perform the HEMOGENYX PHARMPLC. But the stock apears to be less risky and, when comparing its historical volatility, SAFETY MEDICAL PROD is 14.31 times less risky than HEMOGENYX PHARMPLC. The stock trades about -0.03 of its potential returns per unit of risk. The HEMOGENYX PHARMPLC LS 01 is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  860.00  in HEMOGENYX PHARMPLC LS 01 on October 1, 2024 and sell it today you would lose (438.00) from holding HEMOGENYX PHARMPLC LS 01 or give up 50.93% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.8%
Values	Daily Returns

SAFETY MEDICAL PROD  vs.  HEMOGENYX PHARMPLC LS 01

SAFETY MEDICAL PROD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SAFETY MEDICAL PROD 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 rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

HEMOGENYX PHARMPLC

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HEMOGENYX PHARMPLC LS 01 are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, HEMOGENYX PHARMPLC reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SAFETY MEDICAL and HEMOGENYX PHARMPLC

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

The idea behind SAFETY MEDICAL PROD and HEMOGENYX PHARMPLC LS 01 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.