Correlation Between United States and Advanced Medical
Can any of the company-specific risk be diversified away by investing in both United States and Advanced 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 United States and Advanced Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United States Steel and Advanced Medical Solutions, you can compare the effects of market volatilities on United States and Advanced 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 United States with a short position of Advanced Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and Advanced Medical.
Diversification Opportunities for United States and Advanced Medical
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and Advanced is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and Advanced Medical Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Medical Sol and United States 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 United States Steel are associated (or correlated) with Advanced Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Medical Sol has no effect on the direction of United States i.e., United States and Advanced Medical go up and down completely randomly.
Pair Corralation between United States and Advanced Medical
Assuming the 90 days trading horizon United States Steel is expected to under-perform the Advanced Medical. In addition to that, United States is 1.19 times more volatile than Advanced Medical Solutions. It trades about -0.06 of its total potential returns per unit of risk. Advanced Medical Solutions is currently generating about -0.04 per unit of volatility. If you would invest 21,950 in Advanced Medical Solutions on November 6, 2024 and sell it today you would lose (1,850) from holding Advanced Medical Solutions or give up 8.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.39% |
| Values | Daily Returns |
United States Steel vs. Advanced Medical Solutions
Performance |
| Timeline |
| United States Steel |
| Advanced Medical Sol |
United States and Advanced Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United States and Advanced Medical
The main advantage of trading using opposite United States and Advanced Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States position performs unexpectedly, Advanced 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 Advanced Medical will offset losses from the drop in Advanced Medical's long position.| United States vs. Dalata Hotel Group | United States vs. Infrastrutture Wireless Italiane | United States vs. InterContinental Hotels Group | United States vs. Bloomsbury Publishing Plc |
| Advanced Medical vs. Learning Technologies Group | Advanced Medical vs. Clean Power Hydrogen | Advanced Medical vs. Vitec Software Group | Advanced Medical vs. CleanTech Lithium plc |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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