Correlation Between Advanced Medical and Ebro Foods
Can any of the company-specific risk be diversified away by investing in both Advanced Medical and Ebro Foods 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 Advanced Medical and Ebro Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advanced Medical Solutions and Ebro Foods, you can compare the effects of market volatilities on Advanced Medical and Ebro Foods 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 Advanced Medical with a short position of Ebro Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Medical and Ebro Foods.
Diversification Opportunities for Advanced Medical and Ebro Foods
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Advanced and Ebro is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Medical Solutions and Ebro Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ebro Foods and Advanced 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 Advanced Medical Solutions are associated (or correlated) with Ebro Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ebro Foods has no effect on the direction of Advanced Medical i.e., Advanced Medical and Ebro Foods go up and down completely randomly.
Pair Corralation between Advanced Medical and Ebro Foods
Assuming the 90 days trading horizon Advanced Medical Solutions is expected to generate 6.58 times more return on investment than Ebro Foods. However, Advanced Medical is 6.58 times more volatile than Ebro Foods. It trades about 0.22 of its potential returns per unit of risk. Ebro Foods is currently generating about -0.03 per unit of risk. If you would invest 19,180 in Advanced Medical Solutions on October 20, 2024 and sell it today you would earn a total of 2,920 from holding Advanced Medical Solutions or generate 15.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advanced Medical Solutions vs. Ebro Foods
Performance |
| Timeline |
| Advanced Medical Sol |
| Ebro Foods |
Advanced Medical and Ebro Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Medical and Ebro Foods
The main advantage of trading using opposite Advanced Medical and Ebro Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Medical position performs unexpectedly, Ebro Foods 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 Ebro Foods will offset losses from the drop in Ebro Foods' long position.| Advanced Medical vs. Moneta Money Bank | Advanced Medical vs. Metro Bank PLC | Advanced Medical vs. UNIQA Insurance Group | Advanced Medical vs. Ally Financial |
| Ebro Foods vs. Xeros Technology Group | Ebro Foods vs. Alfa Financial Software | Ebro Foods vs. Axway Software SA | Ebro Foods vs. Taiwan Semiconductor Manufacturing |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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