Correlation Between Affluent Medical and Financiere Hoche

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

Diversification Opportunities for Affluent Medical and Financiere Hoche

0.03

Correlation Coefficient

Affluent Medical  Financiere Hoche

Significant diversification

The 3 months correlation between Affluent and Financiere is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Affluent Medical SAS and Financiere Hoche Bains Les Bai in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financiere Hoche Bains 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 Financiere Hoche. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financiere Hoche Bains has no effect on the direction of Affluent Medical i.e., Affluent Medical and Financiere Hoche go up and down completely randomly.

Pair Corralation between Affluent Medical and Financiere Hoche

Assuming the 90 days trading horizon Affluent Medical is expected to generate 4.1 times less return on investment than Financiere Hoche. In addition to that, Affluent Medical is 1.71 times more volatile than Financiere Hoche Bains Les Bains. It trades about 0.03 of its total potential returns per unit of risk. Financiere Hoche Bains Les Bains is currently generating about 0.19 per unit of volatility. If you would invest  7,300  in Financiere Hoche Bains Les Bains on December 27, 2024 and sell it today you would earn a total of  1,150  from holding Financiere Hoche Bains Les Bains or generate 15.75% 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.  Financiere Hoche Bains Les Bai

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.

Financiere Hoche Bains

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Financiere Hoche Bains Les Bains are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Financiere Hoche reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Affluent Medical and Financiere Hoche

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

The idea behind Affluent Medical SAS and Financiere Hoche Bains Les Bains 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.