Correlation Between Advanced Medical and Edita Food
Can any of the company-specific risk be diversified away by investing in both Advanced Medical and Edita Food 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 Edita Food 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 Edita Food Industries, you can compare the effects of market volatilities on Advanced Medical and Edita Food 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 Edita Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Medical and Edita Food.
Diversification Opportunities for Advanced Medical and Edita Food
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Advanced and Edita is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Medical Solutions and Edita Food Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edita Food Industries 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 Edita Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edita Food Industries has no effect on the direction of Advanced Medical i.e., Advanced Medical and Edita Food go up and down completely randomly.
Pair Corralation between Advanced Medical and Edita Food
Assuming the 90 days trading horizon Advanced Medical Solutions is expected to generate 1.14 times more return on investment than Edita Food. However, Advanced Medical is 1.14 times more volatile than Edita Food Industries. It trades about -0.02 of its potential returns per unit of risk. Edita Food Industries is currently generating about -0.06 per unit of risk. If you would invest 24,115 in Advanced Medical Solutions on November 2, 2024 and sell it today you would lose (2,865) from holding Advanced Medical Solutions or give up 11.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advanced Medical Solutions vs. Edita Food Industries
Performance |
| Timeline |
| Advanced Medical Sol |
| Edita Food Industries |
Advanced Medical and Edita Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Medical and Edita Food
The main advantage of trading using opposite Advanced Medical and Edita Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Medical position performs unexpectedly, Edita Food 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 Edita Food will offset losses from the drop in Edita Food's long position.| Advanced Medical vs. Bankers Investment Trust | Advanced Medical vs. Atalaya Mining | Advanced Medical vs. STMicroelectronics NV | Advanced Medical vs. Discover Financial Services |
| Edita Food vs. Sydbank | Edita Food vs. Medical Properties Trust | Edita Food vs. Flow Traders NV | Edita Food vs. Sparebank 1 SR |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Global Correlations Find global opportunities by holding instruments from different markets |