Correlation Between Affluent Medical and ISPD Network

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

Diversification Opportunities for Affluent Medical and ISPD Network

0.34

Correlation Coefficient

Affluent Medical  ISPD Network

Weak diversification

The 3 months correlation between Affluent and ISPD is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Affluent Medical SAS and ISPD Network SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ISPD Network 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 ISPD Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ISPD Network SA has no effect on the direction of Affluent Medical i.e., Affluent Medical and ISPD Network go up and down completely randomly.

Pair Corralation between Affluent Medical and ISPD Network

Assuming the 90 days trading horizon Affluent Medical SAS is expected to generate 0.69 times more return on investment than ISPD Network. However, Affluent Medical SAS is 1.44 times less risky than ISPD Network. It trades about 0.04 of its potential returns per unit of risk. ISPD Network SA is currently generating about -0.02 per unit of risk. If you would invest  134.00  in Affluent Medical SAS on December 30, 2024 and sell it today you would earn a total of  5.00  from holding Affluent Medical SAS or generate 3.73% return on investment over 90 days.

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

Affluent Medical SAS  vs.  ISPD Network SA

Affluent Medical SAS

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Affluent Medical SAS are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

ISPD Network SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days ISPD Network SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, ISPD Network is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Affluent Medical and ISPD Network

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

The idea behind Affluent Medical SAS and ISPD Network 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.