Correlation Between Creo Medical and Futura Medical

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

Diversification Opportunities for Creo Medical and Futura Medical

0.39

Correlation Coefficient

Creo Medical  Futura Medical

Weak diversification

The 3 months correlation between Creo and Futura is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Creo Medical Group and Futura Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Futura Medical 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 Futura Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Futura Medical has no effect on the direction of Creo Medical i.e., Creo Medical and Futura Medical go up and down completely randomly.

Pair Corralation between Creo Medical and Futura Medical

Assuming the 90 days trading horizon Creo Medical Group is expected to under-perform the Futura Medical. In addition to that, Creo Medical is 1.39 times more volatile than Futura Medical. It trades about -0.37 of its total potential returns per unit of risk. Futura Medical is currently generating about -0.37 per unit of volatility. If you would invest  3,800  in Futura Medical on September 5, 2024 and sell it today you would lose (465.00) from holding Futura Medical or give up 12.24% of portfolio value over 90 days.

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

Creo Medical Group  vs.  Futura Medical

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 uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Futura Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Futura Medical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Creo Medical and Futura Medical

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

The idea behind Creo Medical Group and Futura Medical 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.