Correlation Between Allmed Medical and Eyebright Medical

Can any of the company-specific risk be diversified away by investing in both Allmed Medical and Eyebright 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 Allmed Medical and Eyebright Medical 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 Eyebright Medical Technology, you can compare the effects of market volatilities on Allmed Medical and Eyebright 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 Allmed Medical with a short position of Eyebright Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allmed Medical and Eyebright Medical.

Diversification Opportunities for Allmed Medical and Eyebright Medical

-0.27

Correlation Coefficient

Allmed Medical  Eyebright Medical

Very good diversification

The 3 months correlation between Allmed and Eyebright is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Allmed Medical Products and Eyebright Medical Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eyebright Medical 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 Eyebright Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eyebright Medical has no effect on the direction of Allmed Medical i.e., Allmed Medical and Eyebright Medical go up and down completely randomly.

Pair Corralation between Allmed Medical and Eyebright Medical

Assuming the 90 days trading horizon Allmed Medical Products is expected to generate 0.88 times more return on investment than Eyebright Medical. However, Allmed Medical Products is 1.13 times less risky than Eyebright Medical. It trades about 0.11 of its potential returns per unit of risk. Eyebright Medical Technology is currently generating about 0.02 per unit of risk. If you would invest  841.00  in Allmed Medical Products on October 23, 2024 and sell it today you would earn a total of  137.00  from holding Allmed Medical Products or generate 16.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Allmed Medical Products  vs.  Eyebright Medical Technology

Allmed Medical Products

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Allmed Medical Products are ranked lower than 8 (%) 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.

Eyebright Medical

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eyebright Medical Technology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Eyebright Medical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Allmed Medical and Eyebright Medical

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

The idea behind Allmed Medical Products and Eyebright Medical Technology 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.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.