Correlation Between Advanced Medical and PULSION Medical

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

Diversification Opportunities for Advanced Medical and PULSION Medical

-0.01

Correlation Coefficient

Advanced Medical  PULSION Medical

Good diversification

The 3 months correlation between Advanced and PULSION is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Medical Solutions and PULSION Medical Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PULSION Medical Systems 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 PULSION Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PULSION Medical Systems has no effect on the direction of Advanced Medical i.e., Advanced Medical and PULSION Medical go up and down completely randomly.

Pair Corralation between Advanced Medical and PULSION Medical

Assuming the 90 days trading horizon Advanced Medical Solutions is expected to generate 4.45 times more return on investment than PULSION Medical. However, Advanced Medical is 4.45 times more volatile than PULSION Medical Systems. It trades about 0.07 of its potential returns per unit of risk. PULSION Medical Systems is currently generating about 0.03 per unit of risk. If you would invest  226.00  in Advanced Medical Solutions on October 26, 2024 and sell it today you would earn a total of  24.00  from holding Advanced Medical Solutions or generate 10.62% 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.  PULSION Medical Systems

Advanced Medical Sol

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Medical Solutions are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Advanced Medical unveiled solid returns over the last few months and may actually be approaching a breakup point.

PULSION Medical Systems

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PULSION Medical Systems are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, PULSION Medical is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Advanced Medical and PULSION Medical

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

The idea behind Advanced Medical Solutions and PULSION Medical Systems 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.