Correlation Between Advanced Medical and Onxeo SA

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

Diversification Opportunities for Advanced Medical and Onxeo SA

-0.37

Correlation Coefficient

Advanced Medical  Onxeo SA

Very good diversification

The 3 months correlation between Advanced and Onxeo is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Medical Solutions and Onxeo SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Onxeo SA 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 Onxeo SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Onxeo SA has no effect on the direction of Advanced Medical i.e., Advanced Medical and Onxeo SA go up and down completely randomly.

Pair Corralation between Advanced Medical and Onxeo SA

Assuming the 90 days trading horizon Advanced Medical Solutions is expected to under-perform the Onxeo SA. But the stock apears to be less risky and, when comparing its historical volatility, Advanced Medical Solutions is 5.23 times less risky than Onxeo SA. The stock trades about -0.03 of its potential returns per unit of risk. The Onxeo SA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  7.83  in Onxeo SA on December 23, 2024 and sell it today you would lose (1.66) from holding Onxeo SA or give up 21.2% of portfolio value over 90 days.

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

Advanced Medical Solutions  vs.  Onxeo SA

Advanced Medical Sol

Risk-Adjusted Performance

Very Weak

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

Onxeo SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Onxeo SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Onxeo SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Advanced Medical and Onxeo SA

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

The idea behind Advanced Medical Solutions and Onxeo SA 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.