Correlation Between Allmed Medical and Bosera CMSK

Can any of the company-specific risk be diversified away by investing in both Allmed Medical and Bosera CMSK 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 Allmed Medical and Bosera CMSK into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Allmed Medical Products and Bosera CMSK Industrial, you can compare the effects of market volatilities on Allmed Medical and Bosera CMSK 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 Allmed Medical with a short position of Bosera CMSK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allmed Medical and Bosera CMSK.

Diversification Opportunities for Allmed Medical and Bosera CMSK

0.26

Correlation Coefficient

Allmed Medical  Bosera CMSK

Modest diversification

The 3 months correlation between Allmed and Bosera is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Allmed Medical Products and Bosera CMSK Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bosera CMSK Industrial and Allmed 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 Allmed Medical Products are associated (or correlated) with Bosera CMSK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bosera CMSK Industrial has no effect on the direction of Allmed Medical i.e., Allmed Medical and Bosera CMSK go up and down completely randomly.

Pair Corralation between Allmed Medical and Bosera CMSK

Assuming the 90 days trading horizon Allmed Medical Products is expected to generate 1.78 times more return on investment than Bosera CMSK. However, Allmed Medical is 1.78 times more volatile than Bosera CMSK Industrial. It trades about -0.01 of its potential returns per unit of risk. Bosera CMSK Industrial is currently generating about -0.03 per unit of risk. If you would invest  1,245  in Allmed Medical Products on October 22, 2024 and sell it today you would lose (278.00) from holding Allmed Medical Products or give up 22.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Allmed Medical Products  vs.  Bosera CMSK Industrial

Allmed Medical Products

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Allmed Medical Products are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Allmed Medical sustained solid returns over the last few months and may actually be approaching a breakup point.

Bosera CMSK Industrial

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bosera CMSK Industrial are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Bosera CMSK may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Allmed Medical and Bosera CMSK

The main advantage of trading using opposite Allmed Medical and Bosera CMSK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allmed Medical position performs unexpectedly, Bosera CMSK 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 Bosera CMSK will offset losses from the drop in Bosera CMSK's long position.

The idea behind Allmed Medical Products and Bosera CMSK Industrial 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.