Correlation Between Air Transport and PULSION Medical

Can any of the company-specific risk be diversified away by investing in both Air Transport 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 Air Transport and PULSION Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Air Transport Services and PULSION Medical Systems, you can compare the effects of market volatilities on Air Transport 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 Air Transport with a short position of PULSION Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Transport and PULSION Medical.

Diversification Opportunities for Air Transport and PULSION Medical

0.29

Correlation Coefficient

Air Transport  PULSION Medical

Modest diversification

The 3 months correlation between Air and PULSION is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Air Transport Services 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 Air Transport 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 Air Transport Services 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 Air Transport i.e., Air Transport and PULSION Medical go up and down completely randomly.

Pair Corralation between Air Transport and PULSION Medical

Assuming the 90 days horizon Air Transport Services is expected to under-perform the PULSION Medical. In addition to that, Air Transport is 1.33 times more volatile than PULSION Medical Systems. It trades about -0.08 of its total potential returns per unit of risk. PULSION Medical Systems is currently generating about 0.02 per unit of volatility. If you would invest  1,620  in PULSION Medical Systems on December 20, 2024 and sell it today you would earn a total of  10.00  from holding PULSION Medical Systems or generate 0.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Air Transport Services  vs.  PULSION Medical Systems

Air Transport Services

Risk-Adjusted Performance

Very Weak

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

PULSION Medical Systems

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PULSION Medical Systems are ranked lower than 1 (%) 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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Air Transport and PULSION Medical

The main advantage of trading using opposite Air Transport and PULSION Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Transport 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 Air Transport Services 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.