Correlation Between Creo Medical and Medical Properties

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

By analyzing existing cross correlation between Creo Medical Group and Medical Properties Trust, you can compare the effects of market volatilities on Creo Medical and Medical Properties 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 Creo Medical with a short position of Medical Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Creo Medical and Medical Properties.

Diversification Opportunities for Creo Medical and Medical Properties

-0.23

Correlation Coefficient

Creo Medical  Medical Properties

Very good diversification

The 3 months correlation between Creo and Medical is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Creo Medical Group and Medical Properties Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medical Properties Trust and Creo 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 Creo Medical Group are associated (or correlated) with Medical Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medical Properties Trust has no effect on the direction of Creo Medical i.e., Creo Medical and Medical Properties go up and down completely randomly.

Pair Corralation between Creo Medical and Medical Properties

Assuming the 90 days trading horizon Creo Medical Group is expected to under-perform the Medical Properties. In addition to that, Creo Medical is 1.13 times more volatile than Medical Properties Trust. It trades about -0.03 of its total potential returns per unit of risk. Medical Properties Trust is currently generating about 0.16 per unit of volatility. If you would invest  418.00  in Medical Properties Trust on December 1, 2024 and sell it today you would earn a total of  153.00  from holding Medical Properties Trust or generate 36.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Creo Medical Group  vs.  Medical Properties Trust

Creo Medical Group

Risk-Adjusted Performance

Very Weak

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

Medical Properties Trust

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Medical Properties Trust are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Medical Properties unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Creo Medical and Medical Properties

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

The idea behind Creo Medical Group and Medical Properties Trust 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.