Correlation Between Karolinska Development and Isofol Medical

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

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

Diversification Opportunities for Karolinska Development and Isofol Medical

-0.57

Correlation Coefficient

Karolinska Development  Isofol Medical

Excellent diversification

The 3 months correlation between Karolinska and Isofol is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Karolinska Development AB and Isofol Medical AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Isofol Medical AB and Karolinska Development 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 Karolinska Development AB are associated (or correlated) with Isofol Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Isofol Medical AB has no effect on the direction of Karolinska Development i.e., Karolinska Development and Isofol Medical go up and down completely randomly.

Pair Corralation between Karolinska Development and Isofol Medical

Assuming the 90 days trading horizon Karolinska Development AB is expected to generate 0.45 times more return on investment than Isofol Medical. However, Karolinska Development AB is 2.24 times less risky than Isofol Medical. It trades about 0.08 of its potential returns per unit of risk. Isofol Medical AB is currently generating about -0.18 per unit of risk. If you would invest  90.00  in Karolinska Development AB on April 23, 2025 and sell it today you would earn a total of  9.00  from holding Karolinska Development AB or generate 10.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Karolinska Development AB  vs.  Isofol Medical AB

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 5 (%) 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.

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.

Pair Trading with Karolinska Development and Isofol Medical

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

The idea behind Karolinska Development AB and Isofol Medical 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.