Correlation Between ELEMENT FLEET and AFFLUENT MEDICAL

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

By analyzing existing cross correlation between ELEMENT FLEET MGMT and AFFLUENT MEDICAL SAS, you can compare the effects of market volatilities on ELEMENT FLEET and AFFLUENT 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 ELEMENT FLEET with a short position of AFFLUENT MEDICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of ELEMENT FLEET and AFFLUENT MEDICAL.

Diversification Opportunities for ELEMENT FLEET and AFFLUENT MEDICAL

-0.43

Correlation Coefficient

ELEMENT FLEET  AFFLUENT MEDICAL

Very good diversification

The 3 months correlation between ELEMENT and AFFLUENT is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding ELEMENT FLEET MGMT and AFFLUENT MEDICAL SAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AFFLUENT MEDICAL SAS and ELEMENT FLEET 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 ELEMENT FLEET MGMT are associated (or correlated) with AFFLUENT MEDICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AFFLUENT MEDICAL SAS has no effect on the direction of ELEMENT FLEET i.e., ELEMENT FLEET and AFFLUENT MEDICAL go up and down completely randomly.

Pair Corralation between ELEMENT FLEET and AFFLUENT MEDICAL

Assuming the 90 days horizon ELEMENT FLEET MGMT is expected to under-perform the AFFLUENT MEDICAL. But the stock apears to be less risky and, when comparing its historical volatility, ELEMENT FLEET MGMT is 1.92 times less risky than AFFLUENT MEDICAL. The stock trades about -0.04 of its potential returns per unit of risk. The AFFLUENT MEDICAL SAS is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  145.00  in AFFLUENT MEDICAL SAS on December 21, 2024 and sell it today you would lose (1.00) from holding AFFLUENT MEDICAL SAS or give up 0.69% of portfolio value over 90 days.

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

ELEMENT FLEET MGMT  vs.  AFFLUENT MEDICAL SAS

ELEMENT FLEET MGMT

Risk-Adjusted Performance

Very Weak

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

AFFLUENT MEDICAL SAS

Risk-Adjusted Performance

Very Weak

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

Pair Trading with ELEMENT FLEET and AFFLUENT MEDICAL

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

The idea behind ELEMENT FLEET MGMT and AFFLUENT MEDICAL SAS 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 Anywhere module to track or share privately all of your investments from the convenience of any device.