Correlation Between Futura Medical and Celebrus Technologies

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Can any of the company-specific risk be diversified away by investing in both Futura Medical and Celebrus 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 Futura Medical and Celebrus Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Futura Medical and Celebrus Technologies plc, you can compare the effects of market volatilities on Futura Medical and Celebrus 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 Futura Medical with a short position of Celebrus Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Futura Medical and Celebrus Technologies.

Diversification Opportunities for Futura Medical and Celebrus Technologies

-0.31
  Correlation Coefficient

Very good diversification

The 3 months correlation between Futura and Celebrus is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Futura Medical and Celebrus Technologies plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celebrus Technologies plc and Futura 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 Futura Medical are associated (or correlated) with Celebrus Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celebrus Technologies plc has no effect on the direction of Futura Medical i.e., Futura Medical and Celebrus Technologies go up and down completely randomly.

Pair Corralation between Futura Medical and Celebrus Technologies

Assuming the 90 days trading horizon Futura Medical is expected to under-perform the Celebrus Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Futura Medical is 1.19 times less risky than Celebrus Technologies. The stock trades about -0.25 of its potential returns per unit of risk. The Celebrus Technologies plc is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  26,750  in Celebrus Technologies plc on August 29, 2024 and sell it today you would earn a total of  3,500  from holding Celebrus Technologies plc or generate 13.08% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Futura Medical  vs.  Celebrus Technologies plc

 Performance 
       Timeline  
Futura Medical 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Futura Medical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Futura Medical is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.
Celebrus Technologies plc 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Celebrus Technologies plc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Celebrus Technologies may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Futura Medical and Celebrus Technologies Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Futura Medical and Celebrus Technologies

The main advantage of trading using opposite Futura Medical and Celebrus Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Futura Medical position performs unexpectedly, Celebrus 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 Celebrus Technologies will offset losses from the drop in Celebrus Technologies' long position.
The idea behind Futura Medical and Celebrus Technologies plc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Transaction History module to view history of all your transactions and understand their impact on performance.

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