Correlation Between Advanced Medical and Marwyn Value

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

Diversification Opportunities for Advanced Medical and Marwyn Value

0.26

Correlation Coefficient

Advanced Medical  Marwyn Value

Modest diversification

The 3 months correlation between Advanced and Marwyn is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Medical Solutions and Marwyn Value Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marwyn Value Investors 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 Marwyn Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marwyn Value Investors has no effect on the direction of Advanced Medical i.e., Advanced Medical and Marwyn Value go up and down completely randomly.

Pair Corralation between Advanced Medical and Marwyn Value

Assuming the 90 days trading horizon Advanced Medical Solutions is expected to generate 4.2 times more return on investment than Marwyn Value. However, Advanced Medical is 4.2 times more volatile than Marwyn Value Investors. It trades about 0.1 of its potential returns per unit of risk. Marwyn Value Investors is currently generating about 0.32 per unit of risk. If you would invest  19,700  in Advanced Medical Solutions on December 29, 2024 and sell it today you would earn a total of  4,000  from holding Advanced Medical Solutions or generate 20.3% return on investment over 90 days.

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

Advanced Medical Solutions  vs.  Marwyn Value Investors

Advanced Medical Sol

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Medical Solutions are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Advanced Medical exhibited solid returns over the last few months and may actually be approaching a breakup point.

Marwyn Value Investors

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Marwyn Value Investors are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Marwyn Value exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Advanced Medical and Marwyn Value

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

The idea behind Advanced Medical Solutions and Marwyn Value Investors 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.