Correlation Between GMO Internet and Advanced Medical
Can any of the company-specific risk be diversified away by investing in both GMO Internet 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 GMO Internet and Advanced Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GMO Internet and Advanced Medical Solutions, you can compare the effects of market volatilities on GMO Internet 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 GMO Internet with a short position of Advanced Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of GMO Internet and Advanced Medical.
Diversification Opportunities for GMO Internet and Advanced Medical
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between GMO and Advanced is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding GMO Internet 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 GMO Internet 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 GMO Internet 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 GMO Internet i.e., GMO Internet and Advanced Medical go up and down completely randomly.
Pair Corralation between GMO Internet and Advanced Medical
Assuming the 90 days horizon GMO Internet is expected to generate 7.89 times less return on investment than Advanced Medical. But when comparing it to its historical volatility, GMO Internet is 2.7 times less risky than Advanced Medical. It trades about 0.03 of its potential returns per unit of risk. Advanced Medical Solutions is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 234.00 in Advanced Medical Solutions on October 30, 2024 and sell it today you would earn a total of 12.00 from holding Advanced Medical Solutions or generate 5.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GMO Internet vs. Advanced Medical Solutions
Performance |
| Timeline |
| GMO Internet |
| Advanced Medical Sol |
GMO Internet and Advanced Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GMO Internet and Advanced Medical
The main advantage of trading using opposite GMO Internet and Advanced Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GMO Internet 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.| GMO Internet vs. Genertec Universal Medical | GMO Internet vs. Casio Computer CoLtd | GMO Internet vs. SCOTT TECHNOLOGY | GMO Internet vs. X FAB Silicon Foundries |
| Advanced Medical vs. CarsalesCom | Advanced Medical vs. Tradegate AG Wertpapierhandelsbank | Advanced Medical vs. CANON MARKETING JP | Advanced Medical vs. Carsales |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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