Correlation Between Advanced Medical and CleanTech Lithium

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

Diversification Opportunities for Advanced Medical and CleanTech Lithium

0.0

Correlation Coefficient

Advanced Medical  CleanTech Lithium

Pay attention - limited upside

The 3 months correlation between Advanced and CleanTech is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Medical Solutions and CleanTech Lithium plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CleanTech Lithium plc 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 CleanTech Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CleanTech Lithium plc has no effect on the direction of Advanced Medical i.e., Advanced Medical and CleanTech Lithium go up and down completely randomly.

Pair Corralation between Advanced Medical and CleanTech Lithium

Assuming the 90 days trading horizon Advanced Medical Solutions is expected to generate 0.47 times more return on investment than CleanTech Lithium. However, Advanced Medical Solutions is 2.11 times less risky than CleanTech Lithium. It trades about -0.01 of its potential returns per unit of risk. CleanTech Lithium plc is currently generating about -0.04 per unit of risk. If you would invest  24,872  in Advanced Medical Solutions on October 11, 2024 and sell it today you would lose (5,872) from holding Advanced Medical Solutions or give up 23.61% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Advanced Medical Solutions  vs.  CleanTech Lithium plc

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.

CleanTech Lithium plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CleanTech Lithium plc 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 technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Advanced Medical and CleanTech Lithium

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

The idea behind Advanced Medical Solutions and CleanTech Lithium plc 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.

Check out your portfolio center.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.