Correlation Between Advanced Medical and Creo Medical

Can any of the company-specific risk be diversified away by investing in both Advanced Medical and Creo 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 Advanced Medical and Creo Medical 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 Creo Medical Group, you can compare the effects of market volatilities on Advanced Medical and Creo 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 Advanced Medical with a short position of Creo Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Medical and Creo Medical.

Diversification Opportunities for Advanced Medical and Creo Medical

0.59

Correlation Coefficient

Advanced Medical  Creo Medical

Very weak diversification

The 3 months correlation between Advanced and Creo is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Medical Solutions and Creo Medical Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Creo Medical Group 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 Creo Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Creo Medical Group has no effect on the direction of Advanced Medical i.e., Advanced Medical and Creo Medical go up and down completely randomly.

Pair Corralation between Advanced Medical and Creo Medical

Assuming the 90 days trading horizon Advanced Medical Solutions is expected to generate 0.95 times more return on investment than Creo Medical. However, Advanced Medical Solutions is 1.05 times less risky than Creo Medical. It trades about -0.02 of its potential returns per unit of risk. Creo Medical Group is currently generating about -0.3 per unit of risk. If you would invest  23,169  in Advanced Medical Solutions on September 12, 2024 and sell it today you would lose (1,869) from holding Advanced Medical Solutions or give up 8.07% of portfolio value over 90 days.

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

Advanced Medical Solutions  vs.  Creo Medical Group

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 rather sound technical and fundamental indicators, Advanced Medical is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Creo Medical Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Creo Medical Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Advanced Medical and Creo Medical

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

The idea behind Advanced Medical Solutions and Creo Medical Group 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.