Correlation Between Laboratory and Milestone Scientific

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

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

Diversification Opportunities for Laboratory and Milestone Scientific

-0.42

Correlation Coefficient

Laboratory  Milestone Scientific

Very good diversification

The 3 months correlation between Laboratory and Milestone is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Laboratory of and Milestone Scientific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Milestone Scientific and Laboratory 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 Laboratory of are associated (or correlated) with Milestone Scientific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Milestone Scientific has no effect on the direction of Laboratory i.e., Laboratory and Milestone Scientific go up and down completely randomly.

Pair Corralation between Laboratory and Milestone Scientific

Allowing for the 90-day total investment horizon Laboratory is expected to generate 5.49 times less return on investment than Milestone Scientific. But when comparing it to its historical volatility, Laboratory of is 3.84 times less risky than Milestone Scientific. It trades about 0.04 of its potential returns per unit of risk. Milestone Scientific is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  45.00  in Milestone Scientific on September 12, 2024 and sell it today you would earn a total of  44.00  from holding Milestone Scientific or generate 97.78% return on investment over 90 days.

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

Laboratory of  vs.  Milestone Scientific

Laboratory

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Laboratory of are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, Laboratory may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Milestone Scientific

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Milestone Scientific has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Milestone Scientific is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Laboratory and Milestone Scientific

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

The idea behind Laboratory of and Milestone Scientific 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 Valuation module to check real value of public entities based on technical and fundamental data.