Correlation Between CREO MEDICAL and Ross Stores

Can any of the company-specific risk be diversified away by investing in both CREO MEDICAL and Ross Stores 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 Ross Stores 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 Ross Stores, you can compare the effects of market volatilities on CREO MEDICAL and Ross Stores 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 Ross Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of CREO MEDICAL and Ross Stores.

Diversification Opportunities for CREO MEDICAL and Ross Stores

-0.57

Correlation Coefficient

CREO MEDICAL  Ross Stores

Excellent diversification

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

Pair Corralation between CREO MEDICAL and Ross Stores

Assuming the 90 days horizon CREO MEDICAL is expected to generate 1.2 times less return on investment than Ross Stores. In addition to that, CREO MEDICAL is 3.25 times more volatile than Ross Stores. It trades about 0.01 of its total potential returns per unit of risk. Ross Stores is currently generating about 0.05 per unit of volatility. If you would invest  10,821  in Ross Stores on October 4, 2024 and sell it today you would earn a total of  3,801  from holding Ross Stores or generate 35.13% 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.  Ross Stores

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 fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Ross Stores

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ross Stores are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Ross Stores unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CREO MEDICAL and Ross Stores

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

The idea behind CREO MEDICAL GRP and Ross Stores 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.