Correlation Between Advanced Medical and Endeavour Mining

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

Diversification Opportunities for Advanced Medical and Endeavour Mining

0.27

Correlation Coefficient

Advanced Medical  Endeavour Mining

Modest diversification

The 3 months correlation between Advanced and Endeavour is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Medical Solutions and Endeavour Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Endeavour Mining Corp 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 Endeavour Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Endeavour Mining Corp has no effect on the direction of Advanced Medical i.e., Advanced Medical and Endeavour Mining go up and down completely randomly.

Pair Corralation between Advanced Medical and Endeavour Mining

Assuming the 90 days trading horizon Advanced Medical Solutions is expected to under-perform the Endeavour Mining. But the stock apears to be less risky and, when comparing its historical volatility, Advanced Medical Solutions is 1.06 times less risky than Endeavour Mining. The stock trades about -0.14 of its potential returns per unit of risk. The Endeavour Mining Corp is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  164,500  in Endeavour Mining Corp on October 7, 2024 and sell it today you would lose (16,900) from holding Endeavour Mining Corp or give up 10.27% of portfolio value over 90 days.

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

Advanced Medical Solutions  vs.  Endeavour Mining Corp

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.

Endeavour Mining Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Endeavour Mining Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain 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.

Pair Trading with Advanced Medical and Endeavour Mining

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

The idea behind Advanced Medical Solutions and Endeavour Mining Corp 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.