Correlation Between Profound Medical and Hydreight Technologies
Can any of the company-specific risk be diversified away by investing in both Profound Medical and Hydreight 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 Profound Medical and Hydreight Technologies 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 Hydreight Technologies, you can compare the effects of market volatilities on Profound Medical and Hydreight 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 Profound Medical with a short position of Hydreight Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Profound Medical and Hydreight Technologies.
Diversification Opportunities for Profound Medical and Hydreight Technologies
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Profound and Hydreight is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Profound Medical Corp and Hydreight Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hydreight Technologies 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 Hydreight Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hydreight Technologies has no effect on the direction of Profound Medical i.e., Profound Medical and Hydreight Technologies go up and down completely randomly.
Pair Corralation between Profound Medical and Hydreight Technologies
Assuming the 90 days trading horizon Profound Medical Corp is expected to under-perform the Hydreight Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Profound Medical Corp is 1.81 times less risky than Hydreight Technologies. The stock trades about -0.02 of its potential returns per unit of risk. The Hydreight Technologies is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 52.00 in Hydreight Technologies on November 8, 2024 and sell it today you would earn a total of 209.00 from holding Hydreight Technologies or generate 401.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Profound Medical Corp vs. Hydreight Technologies
Performance |
| Timeline |
| Profound Medical Corp |
| Hydreight Technologies |
Profound Medical and Hydreight Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Profound Medical and Hydreight Technologies
The main advantage of trading using opposite Profound Medical and Hydreight Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Profound Medical position performs unexpectedly, Hydreight 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 Hydreight Technologies will offset losses from the drop in Hydreight Technologies' long position.| Profound Medical vs. HLS Therapeutics | Profound Medical vs. Medicenna Therapeutics Corp | Profound Medical vs. Aptose Biosciences |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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