Correlation Between Affluent Medical and Broadpeak

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

By analyzing existing cross correlation between Affluent Medical SAS and Broadpeak SA, you can compare the effects of market volatilities on Affluent Medical and Broadpeak 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 Affluent Medical with a short position of Broadpeak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Affluent Medical and Broadpeak.

Diversification Opportunities for Affluent Medical and Broadpeak

0.01

Correlation Coefficient

Affluent Medical  Broadpeak

Significant diversification

The 3 months correlation between Affluent and Broadpeak is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Affluent Medical SAS and Broadpeak SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broadpeak SA and Affluent Medical 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 Affluent Medical SAS are associated (or correlated) with Broadpeak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broadpeak SA has no effect on the direction of Affluent Medical i.e., Affluent Medical and Broadpeak go up and down completely randomly.

Pair Corralation between Affluent Medical and Broadpeak

Assuming the 90 days trading horizon Affluent Medical SAS is expected to under-perform the Broadpeak. In addition to that, Affluent Medical is 1.29 times more volatile than Broadpeak SA. It trades about -0.01 of its total potential returns per unit of risk. Broadpeak SA is currently generating about 0.13 per unit of volatility. If you would invest  100.00  in Broadpeak SA on December 1, 2024 and sell it today you would earn a total of  26.00  from holding Broadpeak SA or generate 26.0% return on investment over 90 days.

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

Affluent Medical SAS  vs.  Broadpeak SA

Affluent Medical SAS

Risk-Adjusted Performance

Very Weak

Over the last 90 days Affluent Medical SAS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Affluent Medical is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Broadpeak SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Broadpeak SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Broadpeak reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Affluent Medical and Broadpeak

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

The idea behind Affluent Medical SAS and Broadpeak SA 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..