Correlation Between NIGHTINGALE HEALTH and Advanced Medical

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

By analyzing existing cross correlation between NIGHTINGALE HEALTH EO and Advanced Medical Solutions, you can compare the effects of market volatilities on NIGHTINGALE HEALTH and Advanced 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 NIGHTINGALE HEALTH with a short position of Advanced Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of NIGHTINGALE HEALTH and Advanced Medical.

Diversification Opportunities for NIGHTINGALE HEALTH and Advanced Medical

0.47

Correlation Coefficient

NIGHTINGALE HEALTH  Advanced Medical

Very weak diversification

The 3 months correlation between NIGHTINGALE and Advanced is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding NIGHTINGALE HEALTH EO and Advanced Medical Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Medical Sol and NIGHTINGALE HEALTH 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 NIGHTINGALE HEALTH EO are associated (or correlated) with Advanced Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Medical Sol has no effect on the direction of NIGHTINGALE HEALTH i.e., NIGHTINGALE HEALTH and Advanced Medical go up and down completely randomly.

Pair Corralation between NIGHTINGALE HEALTH and Advanced Medical

Assuming the 90 days horizon NIGHTINGALE HEALTH EO is expected to generate 0.8 times more return on investment than Advanced Medical. However, NIGHTINGALE HEALTH EO is 1.25 times less risky than Advanced Medical. It trades about 0.16 of its potential returns per unit of risk. Advanced Medical Solutions is currently generating about -0.16 per unit of risk. If you would invest  281.00  in NIGHTINGALE HEALTH EO on October 11, 2024 and sell it today you would earn a total of  19.00  from holding NIGHTINGALE HEALTH EO or generate 6.76% return on investment over 90 days.

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

NIGHTINGALE HEALTH EO  vs.  Advanced Medical Solutions

NIGHTINGALE HEALTH

Risk-Adjusted Performance

0 of 100

Very Weak

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

Advanced Medical Sol

Risk-Adjusted Performance

0 of 100

Weak

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

Pair Trading with NIGHTINGALE HEALTH and Advanced Medical

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

The idea behind NIGHTINGALE HEALTH EO and Advanced Medical Solutions 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.