Correlation Between Advanced Medical and PPHE Hotel
Can any of the company-specific risk be diversified away by investing in both Advanced Medical and PPHE Hotel 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 PPHE Hotel 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 PPHE Hotel Group, you can compare the effects of market volatilities on Advanced Medical and PPHE Hotel 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 PPHE Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Medical and PPHE Hotel.
Diversification Opportunities for Advanced Medical and PPHE Hotel
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Advanced and PPHE is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Medical Solutions and PPHE Hotel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPHE Hotel Group 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 PPHE Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPHE Hotel Group has no effect on the direction of Advanced Medical i.e., Advanced Medical and PPHE Hotel go up and down completely randomly.
Pair Corralation between Advanced Medical and PPHE Hotel
Assuming the 90 days trading horizon Advanced Medical Solutions is expected to generate 1.93 times more return on investment than PPHE Hotel. However, Advanced Medical is 1.93 times more volatile than PPHE Hotel Group. It trades about 0.16 of its potential returns per unit of risk. PPHE Hotel Group is currently generating about -0.11 per unit of risk. If you would invest 19,660 in Advanced Medical Solutions on October 23, 2024 and sell it today you would earn a total of 1,990 from holding Advanced Medical Solutions or generate 10.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advanced Medical Solutions vs. PPHE Hotel Group
Performance |
| Timeline |
| Advanced Medical Sol |
| PPHE Hotel Group |
Advanced Medical and PPHE Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Medical and PPHE Hotel
The main advantage of trading using opposite Advanced Medical and PPHE Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Medical position performs unexpectedly, PPHE Hotel 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 PPHE Hotel will offset losses from the drop in PPHE Hotel's long position.| Advanced Medical vs. Samsung Electronics Co | Advanced Medical vs. Samsung Electronics Co | Advanced Medical vs. Toyota Motor Corp | Advanced Medical vs. Reliance Industries Ltd |
| PPHE Hotel vs. Orient Telecoms | PPHE Hotel vs. Universal Display Corp | PPHE Hotel vs. Advanced Medical Solutions | PPHE Hotel vs. Medical Properties Trust |
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.
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