Correlation Between Matricelf and Endymed

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

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

Diversification Opportunities for Matricelf and Endymed

0.3

Correlation Coefficient

Matricelf  Endymed

Weak diversification

The 3 months correlation between Matricelf and Endymed is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Matricelf and Endymed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Endymed and Matricelf 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 Matricelf are associated (or correlated) with Endymed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Endymed has no effect on the direction of Matricelf i.e., Matricelf and Endymed go up and down completely randomly.

Pair Corralation between Matricelf and Endymed

Assuming the 90 days trading horizon Matricelf is expected to under-perform the Endymed. But the stock apears to be less risky and, when comparing its historical volatility, Matricelf is 1.84 times less risky than Endymed. The stock trades about -0.26 of its potential returns per unit of risk. The Endymed is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  29,500  in Endymed on February 4, 2024 and sell it today you would earn a total of  5,030  from holding Endymed or generate 17.05% return on investment over 90 days.

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

Matricelf  vs.  Endymed

Matricelf

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Matricelf are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Matricelf is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Endymed

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Endymed are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Endymed may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Matricelf and Endymed

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

The idea behind Matricelf and Endymed 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.