Correlation Between Advanced Medical and Genertec Universal

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

Diversification Opportunities for Advanced Medical and Genertec Universal

-0.29

Correlation Coefficient

Advanced Medical  Genertec Universal

Very good diversification

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

Pair Corralation between Advanced Medical and Genertec Universal

Assuming the 90 days trading horizon Advanced Medical Solutions is expected to under-perform the Genertec Universal. In addition to that, Advanced Medical is 1.07 times more volatile than Genertec Universal Medical. It trades about -0.1 of its total potential returns per unit of risk. Genertec Universal Medical is currently generating about 0.08 per unit of volatility. If you would invest  53.00  in Genertec Universal Medical on October 6, 2024 and sell it today you would earn a total of  4.00  from holding Genertec Universal Medical or generate 7.55% 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.  Genertec Universal Medical

Advanced Medical Sol

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Medical Solutions are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Advanced Medical is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Genertec Universal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genertec Universal Medical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Genertec Universal is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Advanced Medical and Genertec Universal

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

The idea behind Advanced Medical Solutions and Genertec Universal Medical 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.