Correlation Between Advanced Medical and PPHE Hotel

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

Diversification Opportunities for Advanced Medical and PPHE Hotel

-0.29

Correlation Coefficient

Advanced Medical  PPHE Hotel

Very good diversification

The 3 months correlation between Advanced and PPHE is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Medical Solutions and PPHE Hotel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPHE Hotel 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 PPHE Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPHE Hotel Group has no effect on the direction of Advanced Medical i.e., Advanced Medical and PPHE Hotel go up and down completely randomly.

Pair Corralation between Advanced Medical and PPHE Hotel

Assuming the 90 days trading horizon Advanced Medical Solutions is expected to generate 2.35 times more return on investment than PPHE Hotel. However, Advanced Medical is 2.35 times more volatile than PPHE Hotel Group. It trades about 0.09 of its potential returns per unit of risk. PPHE Hotel Group is currently generating about -0.15 per unit of risk. If you would invest  19,700  in Advanced Medical Solutions on December 28, 2024 and sell it today you would earn a total of  3,650  from holding Advanced Medical Solutions or generate 18.53% return on investment over 90 days.

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

Advanced Medical Solutions  vs.  PPHE Hotel Group

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 uncertain technical and fundamental indicators, Advanced Medical exhibited solid returns over the last few months and may actually be approaching a breakup point.

PPHE Hotel Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days PPHE Hotel Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Advanced Medical and PPHE Hotel

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

The idea behind Advanced Medical Solutions and PPHE Hotel 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.