Correlation Between Advanced Braking and Pro Medicus

Can any of the company-specific risk be diversified away by investing in both Advanced Braking and Pro Medicus 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 Pro Medicus 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 Pro Medicus, you can compare the effects of market volatilities on Advanced Braking and Pro Medicus 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 Pro Medicus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Braking and Pro Medicus.

Diversification Opportunities for Advanced Braking and Pro Medicus

0.77

Correlation Coefficient

Advanced Braking  Pro Medicus

Poor diversification

The 3 months correlation between Advanced and Pro is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Braking Technology and Pro Medicus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pro Medicus 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 Pro Medicus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pro Medicus has no effect on the direction of Advanced Braking i.e., Advanced Braking and Pro Medicus go up and down completely randomly.

Pair Corralation between Advanced Braking and Pro Medicus

Assuming the 90 days trading horizon Advanced Braking Technology is expected to generate 0.97 times more return on investment than Pro Medicus. However, Advanced Braking Technology is 1.03 times less risky than Pro Medicus. It trades about 0.0 of its potential returns per unit of risk. Pro Medicus is currently generating about -0.06 per unit of risk. If you would invest  8.10  in Advanced Braking Technology on December 27, 2024 and sell it today you would lose (0.20) from holding Advanced Braking Technology or give up 2.47% of portfolio value over 90 days.

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

Advanced Braking Technology  vs.  Pro Medicus

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.

Pro Medicus

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pro Medicus has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Advanced Braking and Pro Medicus

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

The idea behind Advanced Braking Technology and Pro Medicus 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.