Correlation Between Plant Advanced and Diagnostic Medical

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

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

Diversification Opportunities for Plant Advanced and Diagnostic Medical

-0.74

Correlation Coefficient

Plant Advanced  Diagnostic Medical

Pay attention - limited upside

The 3 months correlation between Plant and Diagnostic is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Plant Advanced Technologies and Diagnostic Medical Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diagnostic Medical and Plant Advanced 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 Plant Advanced Technologies are associated (or correlated) with Diagnostic Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diagnostic Medical has no effect on the direction of Plant Advanced i.e., Plant Advanced and Diagnostic Medical go up and down completely randomly.

Pair Corralation between Plant Advanced and Diagnostic Medical

Assuming the 90 days trading horizon Plant Advanced Technologies is expected to under-perform the Diagnostic Medical. But the stock apears to be less risky and, when comparing its historical volatility, Plant Advanced Technologies is 1.53 times less risky than Diagnostic Medical. The stock trades about -0.1 of its potential returns per unit of risk. The Diagnostic Medical Systems is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  75.00  in Diagnostic Medical Systems on December 24, 2024 and sell it today you would earn a total of  24.00  from holding Diagnostic Medical Systems or generate 32.0% return on investment over 90 days.

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

Plant Advanced Technologies  vs.  Diagnostic Medical Systems

Plant Advanced Techn

Risk-Adjusted Performance

Very Weak

Over the last 90 days Plant Advanced Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Diagnostic Medical

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Diagnostic Medical Systems are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Diagnostic Medical reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Plant Advanced and Diagnostic Medical

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

The idea behind Plant Advanced Technologies and Diagnostic Medical Systems 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.