Correlation Between Advanced Medical and Surgical Science

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

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

Diversification Opportunities for Advanced Medical and Surgical Science

-0.35

Correlation Coefficient

Advanced Medical  Surgical Science

Very good diversification

The 3 months correlation between Advanced and Surgical is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Medical Solutions and Surgical Science Sweden in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Surgical Science Sweden and Advanced 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 Advanced Medical Solutions are associated (or correlated) with Surgical Science. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Surgical Science Sweden has no effect on the direction of Advanced Medical i.e., Advanced Medical and Surgical Science go up and down completely randomly.

Pair Corralation between Advanced Medical and Surgical Science

Assuming the 90 days trading horizon Advanced Medical Solutions is expected to under-perform the Surgical Science. In addition to that, Advanced Medical is 1.14 times more volatile than Surgical Science Sweden. It trades about -0.04 of its total potential returns per unit of risk. Surgical Science Sweden is currently generating about 0.13 per unit of volatility. If you would invest  11,990  in Surgical Science Sweden on September 12, 2024 and sell it today you would earn a total of  2,760  from holding Surgical Science Sweden or generate 23.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Advanced Medical Solutions  vs.  Surgical Science Sweden

Advanced Medical Sol

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Advanced Medical Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Surgical Science Sweden

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Surgical Science Sweden are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Surgical Science unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Advanced Medical and Surgical Science

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

The idea behind Advanced Medical Solutions and Surgical Science Sweden 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.