Correlation Between Cal Comp and Medtecs International

Can any of the company-specific risk be diversified away by investing in both Cal Comp and Medtecs International 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 Cal Comp and Medtecs International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cal Comp Electronics Public and Medtecs International, you can compare the effects of market volatilities on Cal Comp and Medtecs International 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 Cal Comp with a short position of Medtecs International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cal Comp and Medtecs International.

Diversification Opportunities for Cal Comp and Medtecs International

-0.89

Correlation Coefficient

Cal Comp  Medtecs International

Pay attention - limited upside

The 3 months correlation between Cal and Medtecs is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Cal Comp Electronics Public and Medtecs International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medtecs International and Cal Comp 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 Cal Comp Electronics Public are associated (or correlated) with Medtecs International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medtecs International has no effect on the direction of Cal Comp i.e., Cal Comp and Medtecs International go up and down completely randomly.

Pair Corralation between Cal Comp and Medtecs International

Assuming the 90 days trading horizon Cal Comp Electronics Public is expected to generate 2.95 times more return on investment than Medtecs International. However, Cal Comp is 2.95 times more volatile than Medtecs International. It trades about 0.23 of its potential returns per unit of risk. Medtecs International is currently generating about -0.09 per unit of risk. If you would invest  519.00  in Cal Comp Electronics Public on September 13, 2024 and sell it today you would earn a total of  263.00  from holding Cal Comp Electronics Public or generate 50.67% return on investment over 90 days.

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

Cal Comp Electronics Public  vs.  Medtecs International

Cal Comp Electronics

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cal Comp Electronics Public are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Cal Comp showed solid returns over the last few months and may actually be approaching a breakup point.

Medtecs International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Medtecs International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Medtecs International 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 Cal Comp and Medtecs International

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

The idea behind Cal Comp Electronics Public and Medtecs International 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.