Correlation Between Profound Medical and Major Drilling
Can any of the company-specific risk be diversified away by investing in both Profound Medical and Major Drilling 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 Profound Medical and Major Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Profound Medical Corp and Major Drilling Group, you can compare the effects of market volatilities on Profound Medical and Major Drilling 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 Profound Medical with a short position of Major Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Profound Medical and Major Drilling.
Diversification Opportunities for Profound Medical and Major Drilling
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Profound and Major is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Profound Medical Corp and Major Drilling Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Major Drilling Group and Profound 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 Profound Medical Corp are associated (or correlated) with Major Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Major Drilling Group has no effect on the direction of Profound Medical i.e., Profound Medical and Major Drilling go up and down completely randomly.
Pair Corralation between Profound Medical and Major Drilling
Assuming the 90 days trading horizon Profound Medical Corp is expected to generate 1.71 times more return on investment than Major Drilling. However, Profound Medical is 1.71 times more volatile than Major Drilling Group. It trades about 0.01 of its potential returns per unit of risk. Major Drilling Group is currently generating about -0.01 per unit of risk. If you would invest 1,276 in Profound Medical Corp on November 27, 2024 and sell it today you would lose (215.00) from holding Profound Medical Corp or give up 16.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Profound Medical Corp vs. Major Drilling Group
Performance |
| Timeline |
| Profound Medical Corp |
| Major Drilling Group |
Profound Medical and Major Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Profound Medical and Major Drilling
The main advantage of trading using opposite Profound Medical and Major Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Profound Medical position performs unexpectedly, Major Drilling 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 Major Drilling will offset losses from the drop in Major Drilling's long position.| Profound Medical vs. HLS Therapeutics | Profound Medical vs. Medicenna Therapeutics Corp | Profound Medical vs. Aptose Biosciences |
| Major Drilling vs. Pason Systems | Major Drilling vs. HudBay Minerals | Major Drilling vs. Ensign Energy Services | Major Drilling vs. Precision Drilling |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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