Correlation Between Advanced Braking and EMvision Medical

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

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

Diversification Opportunities for Advanced Braking and EMvision Medical

0.18

Correlation Coefficient

Advanced Braking  EMvision Medical

Average diversification

The 3 months correlation between Advanced and EMvision is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Braking Technology and EMvision Medical Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMvision Medical Devices and Advanced Braking 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 Advanced Braking Technology are associated (or correlated) with EMvision Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMvision Medical Devices has no effect on the direction of Advanced Braking i.e., Advanced Braking and EMvision Medical go up and down completely randomly.

Pair Corralation between Advanced Braking and EMvision Medical

Assuming the 90 days trading horizon Advanced Braking is expected to generate 7.13 times less return on investment than EMvision Medical. In addition to that, Advanced Braking is 1.01 times more volatile than EMvision Medical Devices. It trades about 0.01 of its total potential returns per unit of risk. EMvision Medical Devices is currently generating about 0.04 per unit of volatility. If you would invest  189.00  in EMvision Medical Devices on December 23, 2024 and sell it today you would earn a total of  10.00  from holding EMvision Medical Devices or generate 5.29% return on investment over 90 days.

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

Advanced Braking Technology  vs.  EMvision Medical Devices

Advanced Braking Tec

Risk-Adjusted Performance

Very Weak

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

EMvision Medical Devices

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in EMvision Medical Devices are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, EMvision Medical may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Advanced Braking and EMvision Medical

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

The idea behind Advanced Braking Technology and EMvision Medical Devices 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.