Correlation Between Altus Property and Medco Holdings

Can any of the company-specific risk be diversified away by investing in both Altus Property and Medco Holdings 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 Altus Property and Medco Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Altus Property Ventures and Medco Holdings, you can compare the effects of market volatilities on Altus Property and Medco Holdings 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 Altus Property with a short position of Medco Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altus Property and Medco Holdings.

Diversification Opportunities for Altus Property and Medco Holdings

-0.07

Correlation Coefficient

Altus Property  Medco Holdings

Good diversification

The 3 months correlation between Altus and Medco is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Altus Property Ventures and Medco Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medco Holdings and Altus Property 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 Altus Property Ventures are associated (or correlated) with Medco Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medco Holdings has no effect on the direction of Altus Property i.e., Altus Property and Medco Holdings go up and down completely randomly.

Pair Corralation between Altus Property and Medco Holdings

Assuming the 90 days trading horizon Altus Property is expected to generate 15.43 times less return on investment than Medco Holdings. But when comparing it to its historical volatility, Altus Property Ventures is 2.71 times less risky than Medco Holdings. It trades about 0.0 of its potential returns per unit of risk. Medco Holdings is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  12.00  in Medco Holdings on December 30, 2024 and sell it today you would lose (1.00) from holding Medco Holdings or give up 8.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	55.32%
Values	Daily Returns

Altus Property Ventures  vs.  Medco Holdings

Altus Property Ventures

Risk-Adjusted Performance

Very Weak

Over the last 90 days Altus Property Ventures has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Altus Property is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Medco Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Medco Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Medco Holdings is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Altus Property and Medco Holdings

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

The idea behind Altus Property Ventures and Medco Holdings 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.