Correlation Between AFFLUENT MEDICAL and Chevron

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

By analyzing existing cross correlation between AFFLUENT MEDICAL SAS and Chevron, you can compare the effects of market volatilities on AFFLUENT MEDICAL and Chevron 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 AFFLUENT MEDICAL with a short position of Chevron. Check out your portfolio center. Please also check ongoing floating volatility patterns of AFFLUENT MEDICAL and Chevron.

Diversification Opportunities for AFFLUENT MEDICAL and Chevron

-0.27

Correlation Coefficient

AFFLUENT MEDICAL  Chevron

Very good diversification

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

Pair Corralation between AFFLUENT MEDICAL and Chevron

Assuming the 90 days horizon AFFLUENT MEDICAL is expected to generate 5.66 times less return on investment than Chevron. In addition to that, AFFLUENT MEDICAL is 1.84 times more volatile than Chevron. It trades about 0.01 of its total potential returns per unit of risk. Chevron is currently generating about 0.12 per unit of volatility. If you would invest  13,509  in Chevron on December 21, 2024 and sell it today you would earn a total of  1,659  from holding Chevron or generate 12.28% return on investment over 90 days.

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

AFFLUENT MEDICAL SAS  vs.  Chevron

AFFLUENT MEDICAL SAS

Risk-Adjusted Performance

Very Weak

Over the last 90 days AFFLUENT MEDICAL SAS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, AFFLUENT MEDICAL is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Chevron

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chevron are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Chevron reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AFFLUENT MEDICAL and Chevron

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

The idea behind AFFLUENT MEDICAL SAS and Chevron 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.