Correlation Between Advanced Medical and Pressure Technologies
Can any of the company-specific risk be diversified away by investing in both Advanced Medical and Pressure Technologies 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 Pressure Technologies 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 Pressure Technologies Plc, you can compare the effects of market volatilities on Advanced Medical and Pressure Technologies 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 Pressure Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Medical and Pressure Technologies.
Diversification Opportunities for Advanced Medical and Pressure Technologies
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Advanced and Pressure is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Medical Solutions and Pressure Technologies Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pressure Technologies Plc 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 Pressure Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pressure Technologies Plc has no effect on the direction of Advanced Medical i.e., Advanced Medical and Pressure Technologies go up and down completely randomly.
Pair Corralation between Advanced Medical and Pressure Technologies
Assuming the 90 days trading horizon Advanced Medical Solutions is expected to generate 1.22 times more return on investment than Pressure Technologies. However, Advanced Medical is 1.22 times more volatile than Pressure Technologies Plc. It trades about 0.08 of its potential returns per unit of risk. Pressure Technologies Plc is currently generating about -0.17 per unit of risk. If you would invest 19,480 in Advanced Medical Solutions on November 8, 2024 and sell it today you would earn a total of 1,020 from holding Advanced Medical Solutions or generate 5.24% 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. Pressure Technologies Plc
Performance |
| Timeline |
| Advanced Medical Sol |
| Pressure Technologies Plc |
Advanced Medical and Pressure Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Medical and Pressure Technologies
The main advantage of trading using opposite Advanced Medical and Pressure Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Medical position performs unexpectedly, Pressure Technologies 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 Pressure Technologies will offset losses from the drop in Pressure Technologies' long position.| Advanced Medical vs. Cairo Communication SpA | Advanced Medical vs. Chrysalis Investments | Advanced Medical vs. Spirent Communications plc | Advanced Medical vs. Vietnam Enterprise Investments |
| Pressure Technologies vs. Europa Metals | Pressure Technologies vs. Nordic Semiconductor ASA | Pressure Technologies vs. Cornish Metals | Pressure Technologies vs. Adriatic Metals |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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