Correlation Between FineMat Applied and Dynamic Medical

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

By analyzing existing cross correlation between FineMat Applied Materials and Dynamic Medical Technologies, you can compare the effects of market volatilities on FineMat Applied and Dynamic 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 FineMat Applied with a short position of Dynamic Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of FineMat Applied and Dynamic Medical.

Diversification Opportunities for FineMat Applied and Dynamic Medical

0.07

Correlation Coefficient

FineMat Applied  Dynamic Medical

Significant diversification

The 3 months correlation between FineMat and Dynamic is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding FineMat Applied Materials and Dynamic Medical Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynamic Medical Tech and FineMat Applied 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 FineMat Applied Materials are associated (or correlated) with Dynamic Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynamic Medical Tech has no effect on the direction of FineMat Applied i.e., FineMat Applied and Dynamic Medical go up and down completely randomly.

Pair Corralation between FineMat Applied and Dynamic Medical

Assuming the 90 days trading horizon FineMat Applied is expected to generate 1.38 times less return on investment than Dynamic Medical. In addition to that, FineMat Applied is 1.18 times more volatile than Dynamic Medical Technologies. It trades about 0.02 of its total potential returns per unit of risk. Dynamic Medical Technologies is currently generating about 0.04 per unit of volatility. If you would invest  6,436  in Dynamic Medical Technologies on October 25, 2024 and sell it today you would earn a total of  2,554  from holding Dynamic Medical Technologies or generate 39.68% return on investment over 90 days.

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

FineMat Applied Materials  vs.  Dynamic Medical Technologies

FineMat Applied Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FineMat Applied Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Dynamic Medical Tech

Risk-Adjusted Performance

0 of 100

Weak

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

Pair Trading with FineMat Applied and Dynamic Medical

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

The idea behind FineMat Applied Materials and Dynamic Medical Technologies 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.