Correlation Between Advanced Medical and Wheaton Precious

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

Diversification Opportunities for Advanced Medical and Wheaton Precious

0.29

Correlation Coefficient

Advanced Medical  Wheaton Precious

Modest diversification

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

Pair Corralation between Advanced Medical and Wheaton Precious

Assuming the 90 days trading horizon Advanced Medical Solutions is expected to under-perform the Wheaton Precious. But the stock apears to be less risky and, when comparing its historical volatility, Advanced Medical Solutions is 1.0 times less risky than Wheaton Precious. The stock trades about 0.0 of its potential returns per unit of risk. The Wheaton Precious Metals is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  358,973  in Wheaton Precious Metals on October 24, 2024 and sell it today you would earn a total of  127,027  from holding Wheaton Precious Metals or generate 35.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

Advanced Medical Solutions  vs.  Wheaton Precious Metals

Advanced Medical Sol

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Medical Solutions are ranked lower than 4 (%) 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.

Wheaton Precious Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wheaton Precious Metals 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 Wheaton Precious

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

The idea behind Advanced Medical Solutions and Wheaton Precious Metals 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .