Correlation Between CVR Energy and Advanced Medical

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

By analyzing existing cross correlation between CVR Energy and Advanced Medical Solutions, you can compare the effects of market volatilities on CVR Energy and Advanced 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 CVR Energy with a short position of Advanced Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVR Energy and Advanced Medical.

Diversification Opportunities for CVR Energy and Advanced Medical

-0.01

Correlation Coefficient

CVR Energy  Advanced Medical

Good diversification

The 3 months correlation between CVR and Advanced is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding CVR Energy and Advanced Medical Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Medical Sol and CVR Energy 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 CVR Energy are associated (or correlated) with Advanced Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Medical Sol has no effect on the direction of CVR Energy i.e., CVR Energy and Advanced Medical go up and down completely randomly.

Pair Corralation between CVR Energy and Advanced Medical

Assuming the 90 days trading horizon CVR Energy is expected to under-perform the Advanced Medical. In addition to that, CVR Energy is 1.39 times more volatile than Advanced Medical Solutions. It trades about -0.06 of its total potential returns per unit of risk. Advanced Medical Solutions is currently generating about -0.05 per unit of volatility. If you would invest  24,115  in Advanced Medical Solutions on August 31, 2024 and sell it today you would lose (3,065) from holding Advanced Medical Solutions or give up 12.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

CVR Energy  vs.  Advanced Medical Solutions

CVR Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CVR Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Advanced Medical Sol

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Advanced Medical Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with CVR Energy and Advanced Medical

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

The idea behind CVR Energy and Advanced Medical Solutions 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..