Correlation Between Advanced Medical and BII Railway
Can any of the company-specific risk be diversified away by investing in both Advanced Medical and BII Railway 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 BII Railway 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 BII Railway Transportation, you can compare the effects of market volatilities on Advanced Medical and BII Railway 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 BII Railway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Medical and BII Railway.
Diversification Opportunities for Advanced Medical and BII Railway
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Advanced and BII is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Medical Solutions and BII Railway Transportation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BII Railway Transpor 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 BII Railway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BII Railway Transpor has no effect on the direction of Advanced Medical i.e., Advanced Medical and BII Railway go up and down completely randomly.
Pair Corralation between Advanced Medical and BII Railway
Assuming the 90 days trading horizon Advanced Medical Solutions is expected to under-perform the BII Railway. But the stock apears to be less risky and, when comparing its historical volatility, Advanced Medical Solutions is 1.47 times less risky than BII Railway. The stock trades about -0.05 of its potential returns per unit of risk. The BII Railway Transportation is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 2.65 in BII Railway Transportation on August 28, 2024 and sell it today you would lose (0.05) from holding BII Railway Transportation or give up 1.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advanced Medical Solutions vs. BII Railway Transportation
Performance |
| Timeline |
| Advanced Medical Sol |
| BII Railway Transpor |
Advanced Medical and BII Railway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Medical and BII Railway
The main advantage of trading using opposite Advanced Medical and BII Railway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Medical position performs unexpectedly, BII Railway 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 BII Railway will offset losses from the drop in BII Railway's long position.| Advanced Medical vs. Apple Inc | Advanced Medical vs. Apple Inc | Advanced Medical vs. Apple Inc | Advanced Medical vs. Apple Inc |
| BII Railway vs. Accenture plc | BII Railway vs. Cognizant Technology Solutions | BII Railway vs. Superior Plus Corp | BII Railway vs. NMI Holdings |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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