Correlation Between Creo Medical and Technicolor

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

Diversification Opportunities for Creo Medical and Technicolor

0.4

Correlation Coefficient

Creo Medical  Technicolor

Very weak diversification

The 3 months correlation between Creo and Technicolor is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Creo Medical Group and Technicolor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Technicolor 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 Technicolor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Technicolor has no effect on the direction of Creo Medical i.e., Creo Medical and Technicolor go up and down completely randomly.

Pair Corralation between Creo Medical and Technicolor

Assuming the 90 days trading horizon Creo Medical Group is expected to generate 1.11 times more return on investment than Technicolor. However, Creo Medical is 1.11 times more volatile than Technicolor. It trades about -0.05 of its potential returns per unit of risk. Technicolor is currently generating about -0.13 per unit of risk. If you would invest  2,000  in Creo Medical Group on October 25, 2024 and sell it today you would lose (262.00) from holding Creo Medical Group or give up 13.1% of portfolio value over 90 days.

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

Creo Medical Group  vs.  Technicolor

Creo Medical Group

Risk-Adjusted Performance

0 of 100

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 latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Technicolor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Technicolor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Creo Medical and Technicolor

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

The idea behind Creo Medical Group and Technicolor 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.