Correlation Between Air Transport and Advanced Medical
Can any of the company-specific risk be diversified away by investing in both Air Transport and Advanced Medical 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 Air Transport and Advanced Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Transport Services and Advanced Medical Solutions, you can compare the effects of market volatilities on Air Transport and Advanced Medical 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 Air Transport with a short position of Advanced Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Transport and Advanced Medical.
Diversification Opportunities for Air Transport and Advanced Medical
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Air and Advanced is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Air Transport Services and Advanced Medical Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Medical Sol and Air Transport 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 Air Transport Services are associated (or correlated) with Advanced Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Medical Sol has no effect on the direction of Air Transport i.e., Air Transport and Advanced Medical go up and down completely randomly.
Pair Corralation between Air Transport and Advanced Medical
Assuming the 90 days horizon Air Transport is expected to generate 6.11 times less return on investment than Advanced Medical. But when comparing it to its historical volatility, Air Transport Services is 4.79 times less risky than Advanced Medical. It trades about 0.07 of its potential returns per unit of risk. Advanced Medical Solutions is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 230.00 in Advanced Medical Solutions on November 5, 2024 and sell it today you would earn a total of 12.00 from holding Advanced Medical Solutions or generate 5.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Transport Services vs. Advanced Medical Solutions
Performance |
| Timeline |
| Air Transport Services |
| Advanced Medical Sol |
Air Transport and Advanced Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Transport and Advanced Medical
The main advantage of trading using opposite Air Transport and Advanced Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Transport position performs unexpectedly, Advanced Medical 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 Advanced Medical will offset losses from the drop in Advanced Medical's long position.| Air Transport vs. The Japan Steel | Air Transport vs. Daido Steel Co | Air Transport vs. Tianjin Capital Environmental | Air Transport vs. MGIC INVESTMENT |
| Advanced Medical vs. SIVERS SEMICONDUCTORS AB | Advanced Medical vs. NorAm Drilling AS | Advanced Medical vs. Volkswagen AG | Advanced Medical vs. Darden Restaurants |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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