Correlation Between OBSERVE MEDICAL and AAC TECHNOLOGHLDGADR
Can any of the company-specific risk be diversified away by investing in both OBSERVE MEDICAL and AAC TECHNOLOGHLDGADR 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 OBSERVE MEDICAL and AAC TECHNOLOGHLDGADR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OBSERVE MEDICAL ASA and AAC TECHNOLOGHLDGADR, you can compare the effects of market volatilities on OBSERVE MEDICAL and AAC TECHNOLOGHLDGADR 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 OBSERVE MEDICAL with a short position of AAC TECHNOLOGHLDGADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of OBSERVE MEDICAL and AAC TECHNOLOGHLDGADR.
Diversification Opportunities for OBSERVE MEDICAL and AAC TECHNOLOGHLDGADR
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between OBSERVE and AAC is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding OBSERVE MEDICAL ASA and AAC TECHNOLOGHLDGADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAC TECHNOLOGHLDGADR and OBSERVE 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 OBSERVE MEDICAL ASA are associated (or correlated) with AAC TECHNOLOGHLDGADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AAC TECHNOLOGHLDGADR has no effect on the direction of OBSERVE MEDICAL i.e., OBSERVE MEDICAL and AAC TECHNOLOGHLDGADR go up and down completely randomly.
Pair Corralation between OBSERVE MEDICAL and AAC TECHNOLOGHLDGADR
Assuming the 90 days trading horizon OBSERVE MEDICAL ASA is expected to generate 10.44 times more return on investment than AAC TECHNOLOGHLDGADR. However, OBSERVE MEDICAL is 10.44 times more volatile than AAC TECHNOLOGHLDGADR. It trades about 0.07 of its potential returns per unit of risk. AAC TECHNOLOGHLDGADR is currently generating about 0.05 per unit of risk. If you would invest 19.00 in OBSERVE MEDICAL ASA on October 14, 2024 and sell it today you would lose (16.22) from holding OBSERVE MEDICAL ASA or give up 85.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
OBSERVE MEDICAL ASA vs. AAC TECHNOLOGHLDGADR
Performance |
| Timeline |
| OBSERVE MEDICAL ASA |
| AAC TECHNOLOGHLDGADR |
OBSERVE MEDICAL and AAC TECHNOLOGHLDGADR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OBSERVE MEDICAL and AAC TECHNOLOGHLDGADR
The main advantage of trading using opposite OBSERVE MEDICAL and AAC TECHNOLOGHLDGADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OBSERVE MEDICAL position performs unexpectedly, AAC TECHNOLOGHLDGADR 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 AAC TECHNOLOGHLDGADR will offset losses from the drop in AAC TECHNOLOGHLDGADR's long position.| OBSERVE MEDICAL vs. Harmony Gold Mining | OBSERVE MEDICAL vs. ADRIATIC METALS LS 013355 | OBSERVE MEDICAL vs. Jacquet Metal Service | OBSERVE MEDICAL vs. ARROW ELECTRONICS |
| AAC TECHNOLOGHLDGADR vs. Advanced Medical Solutions | AAC TECHNOLOGHLDGADR vs. Molson Coors Beverage | AAC TECHNOLOGHLDGADR vs. GLOBUS MEDICAL A | AAC TECHNOLOGHLDGADR vs. OBSERVE MEDICAL ASA |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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