Correlation Between EV Advanced and MEDICOX

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

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

Diversification Opportunities for EV Advanced and MEDICOX

0.57

Correlation Coefficient

EV Advanced  MEDICOX

Very weak diversification

The 3 months correlation between 131400 and MEDICOX is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding EV Advanced Material and MEDICOX Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MEDICOX and EV Advanced 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 EV Advanced Material are associated (or correlated) with MEDICOX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MEDICOX has no effect on the direction of EV Advanced i.e., EV Advanced and MEDICOX go up and down completely randomly.

Pair Corralation between EV Advanced and MEDICOX

Assuming the 90 days trading horizon EV Advanced Material is expected to under-perform the MEDICOX. But the stock apears to be less risky and, when comparing its historical volatility, EV Advanced Material is 1.01 times less risky than MEDICOX. The stock trades about -0.05 of its potential returns per unit of risk. The MEDICOX Co is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  33,400  in MEDICOX Co on October 26, 2024 and sell it today you would lose (4,400) from holding MEDICOX Co or give up 13.17% of portfolio value over 90 days.

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

EV Advanced Material  vs.  MEDICOX Co

EV Advanced Material

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EV Advanced Material has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

MEDICOX

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MEDICOX Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with EV Advanced and MEDICOX

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

The idea behind EV Advanced Material and MEDICOX Co 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.