Correlation Between Advanced Medical and SECOM CO
Can any of the company-specific risk be diversified away by investing in both Advanced Medical and SECOM CO 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 SECOM CO 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 SECOM LTD, you can compare the effects of market volatilities on Advanced Medical and SECOM CO 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 SECOM CO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Medical and SECOM CO.
Diversification Opportunities for Advanced Medical and SECOM CO
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Advanced and SECOM is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Medical Solutions and SECOM LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SECOM LTD 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 SECOM CO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SECOM LTD has no effect on the direction of Advanced Medical i.e., Advanced Medical and SECOM CO go up and down completely randomly.
Pair Corralation between Advanced Medical and SECOM CO
Assuming the 90 days trading horizon Advanced Medical is expected to generate 1.78 times less return on investment than SECOM CO. In addition to that, Advanced Medical is 1.75 times more volatile than SECOM LTD. It trades about 0.01 of its total potential returns per unit of risk. SECOM LTD is currently generating about 0.03 per unit of volatility. If you would invest 2,675 in SECOM LTD on October 19, 2024 and sell it today you would earn a total of 525.00 from holding SECOM LTD or generate 19.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advanced Medical Solutions vs. SECOM LTD
Performance |
| Timeline |
| Advanced Medical Sol |
| SECOM LTD |
Advanced Medical and SECOM CO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Medical and SECOM CO
The main advantage of trading using opposite Advanced Medical and SECOM CO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Medical position performs unexpectedly, SECOM CO 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 SECOM CO will offset losses from the drop in SECOM CO's long position.| Advanced Medical vs. FAIR ISAAC | Advanced Medical vs. Nishi Nippon Railroad Co | Advanced Medical vs. Delta Air Lines | Advanced Medical vs. Altair Engineering |
| SECOM CO vs. Peijia Medical Limited | SECOM CO vs. Advanced Medical Solutions | SECOM CO vs. PLAYMATES TOYS | SECOM CO vs. United Utilities Group |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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