Correlation Between Falcon Metals and Pro Medicus

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

By analyzing existing cross correlation between Falcon Metals and Pro Medicus, you can compare the effects of market volatilities on Falcon Metals and Pro Medicus 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 Falcon Metals with a short position of Pro Medicus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falcon Metals and Pro Medicus.

Diversification Opportunities for Falcon Metals and Pro Medicus

0.07

Correlation Coefficient

Falcon Metals  Pro Medicus

Significant diversification

The 3 months correlation between Falcon and Pro is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Metals and Pro Medicus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pro Medicus and Falcon Metals 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 Falcon Metals are associated (or correlated) with Pro Medicus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pro Medicus has no effect on the direction of Falcon Metals i.e., Falcon Metals and Pro Medicus go up and down completely randomly.

Pair Corralation between Falcon Metals and Pro Medicus

Assuming the 90 days trading horizon Falcon Metals is expected to under-perform the Pro Medicus. In addition to that, Falcon Metals is 1.97 times more volatile than Pro Medicus. It trades about -0.08 of its total potential returns per unit of risk. Pro Medicus is currently generating about 0.0 per unit of volatility. If you would invest  25,650  in Pro Medicus on December 3, 2024 and sell it today you would lose (325.00) from holding Pro Medicus or give up 1.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Falcon Metals  vs.  Pro Medicus

Falcon Metals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Falcon Metals 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 essential indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pro Medicus

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pro Medicus has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Pro Medicus 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 Falcon Metals and Pro Medicus

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

The idea behind Falcon Metals and Pro Medicus 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 Valuation module to check real value of public entities based on technical and fundamental data.