Correlation Between CREO MEDICAL and Phillips

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

By analyzing existing cross correlation between CREO MEDICAL GRP and Phillips 66, you can compare the effects of market volatilities on CREO MEDICAL and Phillips 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 CREO MEDICAL with a short position of Phillips. Check out your portfolio center. Please also check ongoing floating volatility patterns of CREO MEDICAL and Phillips.

Diversification Opportunities for CREO MEDICAL and Phillips

-0.46

Correlation Coefficient

CREO MEDICAL  Phillips

Very good diversification

The 3 months correlation between CREO and Phillips is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding CREO MEDICAL GRP and Phillips 66 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phillips 66 and CREO 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 CREO MEDICAL GRP are associated (or correlated) with Phillips. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phillips 66 has no effect on the direction of CREO MEDICAL i.e., CREO MEDICAL and Phillips go up and down completely randomly.

Pair Corralation between CREO MEDICAL and Phillips

Assuming the 90 days horizon CREO MEDICAL is expected to generate 1.1 times less return on investment than Phillips. In addition to that, CREO MEDICAL is 2.72 times more volatile than Phillips 66. It trades about 0.02 of its total potential returns per unit of risk. Phillips 66 is currently generating about 0.05 per unit of volatility. If you would invest  8,361  in Phillips 66 on October 24, 2024 and sell it today you would earn a total of  3,165  from holding Phillips 66 or generate 37.85% return on investment over 90 days.

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

CREO MEDICAL GRP  vs.  Phillips 66

CREO MEDICAL GRP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CREO MEDICAL GRP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Phillips 66

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Phillips 66 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Phillips is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CREO MEDICAL and Phillips

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

The idea behind CREO MEDICAL GRP and Phillips 66 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.