Correlation Between Advanced Medical and LG Electronics
Can any of the company-specific risk be diversified away by investing in both Advanced Medical and LG Electronics 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 LG Electronics 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 LG Electronics, you can compare the effects of market volatilities on Advanced Medical and LG Electronics 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 LG Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Medical and LG Electronics.
Diversification Opportunities for Advanced Medical and LG Electronics
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Advanced and LGLG is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Medical Solutions and LG Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Electronics 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 LG Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Electronics has no effect on the direction of Advanced Medical i.e., Advanced Medical and LG Electronics go up and down completely randomly.
Pair Corralation between Advanced Medical and LG Electronics
Assuming the 90 days trading horizon Advanced Medical Solutions is expected to generate 1.03 times more return on investment than LG Electronics. However, Advanced Medical is 1.03 times more volatile than LG Electronics. It trades about 0.01 of its potential returns per unit of risk. LG Electronics is currently generating about -0.01 per unit of risk. If you would invest 242.00 in Advanced Medical Solutions on October 29, 2024 and sell it today you would earn a total of 4.00 from holding Advanced Medical Solutions or generate 1.65% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Flat |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Advanced Medical Solutions vs. LG Electronics
Performance |
Timeline |
Advanced Medical Sol |
LG Electronics |
Advanced Medical and LG Electronics Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Advanced Medical and LG Electronics
The main advantage of trading using opposite Advanced Medical and LG Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Medical position performs unexpectedly, LG Electronics 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 LG Electronics will offset losses from the drop in LG Electronics' long position.Advanced Medical vs. Xenia Hotels Resorts | Advanced Medical vs. MeVis Medical Solutions | Advanced Medical vs. DALATA HOTEL | Advanced Medical vs. Compugroup Medical SE |
LG Electronics vs. ARDAGH METAL PACDL 0001 | LG Electronics vs. COMPUTERSHARE | LG Electronics vs. Western Copper and | LG Electronics vs. Perseus Mining Limited |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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