Correlation Between SuperAlloy Industrial and Dynamic Medical

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

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

Diversification Opportunities for SuperAlloy Industrial and Dynamic Medical

0.59

Correlation Coefficient

SuperAlloy Industrial  Dynamic Medical

Very weak diversification

The 3 months correlation between SuperAlloy and Dynamic is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding SuperAlloy Industrial Co, and Dynamic Medical Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynamic Medical Tech and SuperAlloy Industrial 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 SuperAlloy Industrial Co, are associated (or correlated) with Dynamic Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynamic Medical Tech has no effect on the direction of SuperAlloy Industrial i.e., SuperAlloy Industrial and Dynamic Medical go up and down completely randomly.

Pair Corralation between SuperAlloy Industrial and Dynamic Medical

Assuming the 90 days trading horizon SuperAlloy Industrial Co, is expected to generate 1.99 times more return on investment than Dynamic Medical. However, SuperAlloy Industrial is 1.99 times more volatile than Dynamic Medical Technologies. It trades about 0.25 of its potential returns per unit of risk. Dynamic Medical Technologies is currently generating about 0.01 per unit of risk. If you would invest  5,480  in SuperAlloy Industrial Co, on December 26, 2024 and sell it today you would earn a total of  1,420  from holding SuperAlloy Industrial Co, or generate 25.91% return on investment over 90 days.

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

SuperAlloy Industrial Co,  vs.  Dynamic Medical Technologies

SuperAlloy Industrial Co,

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SuperAlloy Industrial Co, are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, SuperAlloy Industrial showed solid returns over the last few months and may actually be approaching a breakup point.

Dynamic Medical Tech

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dynamic Medical Technologies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Dynamic Medical is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with SuperAlloy Industrial and Dynamic Medical

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

The idea behind SuperAlloy Industrial Co, and Dynamic Medical Technologies 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.