Correlation Between Excelsior Medical and ADLINK Technology

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

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

Diversification Opportunities for Excelsior Medical and ADLINK Technology

-0.56

Correlation Coefficient

Excelsior Medical  ADLINK Technology

Excellent diversification

The 3 months correlation between Excelsior and ADLINK is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Excelsior Medical Co and ADLINK Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADLINK Technology and Excelsior 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 Excelsior Medical Co are associated (or correlated) with ADLINK Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADLINK Technology has no effect on the direction of Excelsior Medical i.e., Excelsior Medical and ADLINK Technology go up and down completely randomly.

Pair Corralation between Excelsior Medical and ADLINK Technology

Assuming the 90 days trading horizon Excelsior Medical Co is expected to under-perform the ADLINK Technology. But the stock apears to be less risky and, when comparing its historical volatility, Excelsior Medical Co is 7.41 times less risky than ADLINK Technology. The stock trades about -0.1 of its potential returns per unit of risk. The ADLINK Technology is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  6,960  in ADLINK Technology on October 26, 2024 and sell it today you would earn a total of  580.00  from holding ADLINK Technology or generate 8.33% return on investment over 90 days.

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

Excelsior Medical Co  vs.  ADLINK Technology

Excelsior Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Excelsior Medical Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Excelsior Medical is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

ADLINK Technology

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ADLINK Technology are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, ADLINK Technology may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Excelsior Medical and ADLINK Technology

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

The idea behind Excelsior Medical Co and ADLINK Technology 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.