Correlation Between 4Dmedical and Collins Foods

Can any of the company-specific risk be diversified away by investing in both 4Dmedical and Collins Foods 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 4Dmedical and Collins Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 4Dmedical and Collins Foods, you can compare the effects of market volatilities on 4Dmedical and Collins Foods 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 4Dmedical with a short position of Collins Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of 4Dmedical and Collins Foods.

Diversification Opportunities for 4Dmedical and Collins Foods

0.58

Correlation Coefficient

4Dmedical  Collins Foods

Very weak diversification

The 3 months correlation between 4Dmedical and Collins is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding 4Dmedical and Collins Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Collins Foods and 4Dmedical 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 4Dmedical are associated (or correlated) with Collins Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Collins Foods has no effect on the direction of 4Dmedical i.e., 4Dmedical and Collins Foods go up and down completely randomly.

Pair Corralation between 4Dmedical and Collins Foods

Assuming the 90 days trading horizon 4Dmedical is expected to generate 3.94 times more return on investment than Collins Foods. However, 4Dmedical is 3.94 times more volatile than Collins Foods. It trades about -0.03 of its potential returns per unit of risk. Collins Foods is currently generating about -0.22 per unit of risk. If you would invest  53.00  in 4Dmedical on October 6, 2024 and sell it today you would lose (5.00) from holding 4Dmedical or give up 9.43% of portfolio value over 90 days.

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

4Dmedical  vs.  Collins Foods

4Dmedical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 4Dmedical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, 4Dmedical is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Collins Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Collins Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with 4Dmedical and Collins Foods

The main advantage of trading using opposite 4Dmedical and Collins Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 4Dmedical position performs unexpectedly, Collins Foods 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 Collins Foods will offset losses from the drop in Collins Foods' long position.

The idea behind 4Dmedical and Collins Foods 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.