Correlation Between Advanced Medical and Old Mutual
Can any of the company-specific risk be diversified away by investing in both Advanced Medical and Old Mutual 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 Old Mutual 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 Old Mutual, you can compare the effects of market volatilities on Advanced Medical and Old Mutual 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 Old Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Medical and Old Mutual.
Diversification Opportunities for Advanced Medical and Old Mutual
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Advanced and Old is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Medical Solutions and Old Mutual in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Mutual 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 Old Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Mutual has no effect on the direction of Advanced Medical i.e., Advanced Medical and Old Mutual go up and down completely randomly.
Pair Corralation between Advanced Medical and Old Mutual
Assuming the 90 days trading horizon Advanced Medical Solutions is expected to under-perform the Old Mutual. But the stock apears to be less risky and, when comparing its historical volatility, Advanced Medical Solutions is 2.9 times less risky than Old Mutual. The stock trades about 0.0 of its potential returns per unit of risk. The Old Mutual is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,672 in Old Mutual on September 3, 2024 and sell it today you would earn a total of 3,848 from holding Old Mutual or generate 230.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advanced Medical Solutions vs. Old Mutual
Performance |
| Timeline |
| Advanced Medical Sol |
| Old Mutual |
Advanced Medical and Old Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Medical and Old Mutual
The main advantage of trading using opposite Advanced Medical and Old Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Medical position performs unexpectedly, Old Mutual 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 Old Mutual will offset losses from the drop in Old Mutual's long position.| Advanced Medical vs. National Beverage Corp | Advanced Medical vs. Cincinnati Financial Corp | Advanced Medical vs. Qurate Retail Series | Advanced Medical vs. St Galler Kantonalbank |
| Old Mutual vs. Advanced Medical Solutions | Old Mutual vs. Empire Metals Limited | Old Mutual vs. CompuGroup Medical AG | Old Mutual vs. CAP LEASE AVIATION |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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