Correlation Between Isofol Medical and Karolinska Development

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

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

Diversification Opportunities for Isofol Medical and Karolinska Development

-0.37

Correlation Coefficient

Isofol Medical  Karolinska Development

Very good diversification

The 3 months correlation between Isofol and Karolinska is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Isofol Medical AB and Karolinska Development AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Karolinska Development and Isofol 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 Isofol Medical AB are associated (or correlated) with Karolinska Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Karolinska Development has no effect on the direction of Isofol Medical i.e., Isofol Medical and Karolinska Development go up and down completely randomly.

Pair Corralation between Isofol Medical and Karolinska Development

Assuming the 90 days trading horizon Isofol Medical AB is expected to under-perform the Karolinska Development. In addition to that, Isofol Medical is 2.28 times more volatile than Karolinska Development AB. It trades about -0.15 of its total potential returns per unit of risk. Karolinska Development AB is currently generating about 0.05 per unit of volatility. If you would invest  92.00  in Karolinska Development AB on April 25, 2025 and sell it today you would earn a total of  6.00  from holding Karolinska Development AB or generate 6.52% return on investment over 90 days.

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

Isofol Medical AB  vs.  Karolinska Development AB

Isofol Medical AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Isofol Medical AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in August 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Karolinska Development

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Karolinska Development AB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Karolinska Development may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Isofol Medical and Karolinska Development

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

The idea behind Isofol Medical AB and Karolinska Development 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.