Correlation Between Camurus AB and MedCap AB

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

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

Diversification Opportunities for Camurus AB and MedCap AB

0.62

Correlation Coefficient

Camurus AB  MedCap AB

Poor diversification

The 3 months correlation between Camurus and MedCap is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Camurus AB and MedCap AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MedCap AB and Camurus AB 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 Camurus AB are associated (or correlated) with MedCap AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MedCap AB has no effect on the direction of Camurus AB i.e., Camurus AB and MedCap AB go up and down completely randomly.

Pair Corralation between Camurus AB and MedCap AB

Assuming the 90 days trading horizon Camurus AB is expected to generate 1.17 times less return on investment than MedCap AB. In addition to that, Camurus AB is 2.03 times more volatile than MedCap AB. It trades about 0.1 of its total potential returns per unit of risk. MedCap AB is currently generating about 0.24 per unit of volatility. If you would invest  40,350  in MedCap AB on April 23, 2025 and sell it today you would earn a total of  12,750  from holding MedCap AB or generate 31.6% return on investment over 90 days.

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

Camurus AB  vs.  MedCap AB

Camurus AB

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Camurus AB are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Camurus AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

MedCap AB

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MedCap AB are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, MedCap AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Camurus AB and MedCap AB

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

The idea behind Camurus AB and MedCap 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.