Correlation Between Creo Medical and Induction Healthcare

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

Diversification Opportunities for Creo Medical and Induction Healthcare

-0.71

Correlation Coefficient

Creo Medical  Induction Healthcare

Pay attention - limited upside

The 3 months correlation between Creo and Induction is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Creo Medical Group and Induction Healthcare Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Induction Healthcare 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 Induction Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Induction Healthcare has no effect on the direction of Creo Medical i.e., Creo Medical and Induction Healthcare go up and down completely randomly.

Pair Corralation between Creo Medical and Induction Healthcare

Assuming the 90 days trading horizon Creo Medical Group is expected to generate 2.95 times more return on investment than Induction Healthcare. However, Creo Medical is 2.95 times more volatile than Induction Healthcare Group. It trades about 0.3 of its potential returns per unit of risk. Induction Healthcare Group is currently generating about 0.01 per unit of risk. If you would invest  1,450  in Creo Medical Group on October 8, 2024 and sell it today you would earn a total of  450.00  from holding Creo Medical Group or generate 31.03% return on investment over 90 days.

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

Creo Medical Group  vs.  Induction Healthcare Group

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 February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Induction Healthcare

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Induction Healthcare Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Induction Healthcare unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Creo Medical and Induction Healthcare

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

The idea behind Creo Medical Group and Induction Healthcare Group 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.