Correlation Between Asia Medical and Professional Waste

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

By analyzing existing cross correlation between Asia Medical Agricultural and Professional Waste Technology, you can compare the effects of market volatilities on Asia Medical and Professional Waste 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 Asia Medical with a short position of Professional Waste. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Medical and Professional Waste.

Diversification Opportunities for Asia Medical and Professional Waste

0.17

Correlation Coefficient

Asia Medical  Professional Waste

Average diversification

The 3 months correlation between Asia and Professional is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Asia Medical Agricultural and Professional Waste Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Professional Waste and Asia 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 Asia Medical Agricultural are associated (or correlated) with Professional Waste. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Professional Waste has no effect on the direction of Asia Medical i.e., Asia Medical and Professional Waste go up and down completely randomly.

Pair Corralation between Asia Medical and Professional Waste

Assuming the 90 days trading horizon Asia Medical Agricultural is expected to under-perform the Professional Waste. But the stock apears to be less risky and, when comparing its historical volatility, Asia Medical Agricultural is 26.98 times less risky than Professional Waste. The stock trades about -0.05 of its potential returns per unit of risk. The Professional Waste Technology is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  35.00  in Professional Waste Technology on September 24, 2024 and sell it today you would lose (35.00) from holding Professional Waste Technology or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.59%
Values	Daily Returns

Asia Medical Agricultural  vs.  Professional Waste Technology

Asia Medical Agricultural

Risk-Adjusted Performance

0 of 100

Very Weak

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

Professional Waste

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Professional Waste Technology are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Professional Waste disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Asia Medical and Professional Waste

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

The idea behind Asia Medical Agricultural and Professional Waste Technology 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.