Correlation Between Futura Medical and Cornish Metals

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

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

Diversification Opportunities for Futura Medical and Cornish Metals

-0.22

Correlation Coefficient

Futura Medical  Cornish Metals

Very good diversification

The 3 months correlation between Futura and Cornish is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Futura Medical and Cornish Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cornish Metals and Futura 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 Futura Medical are associated (or correlated) with Cornish Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cornish Metals has no effect on the direction of Futura Medical i.e., Futura Medical and Cornish Metals go up and down completely randomly.

Pair Corralation between Futura Medical and Cornish Metals

Assuming the 90 days trading horizon Futura Medical is expected to generate 1.03 times more return on investment than Cornish Metals. However, Futura Medical is 1.03 times more volatile than Cornish Metals. It trades about -0.01 of its potential returns per unit of risk. Cornish Metals is currently generating about -0.01 per unit of risk. If you would invest  5,290  in Futura Medical on October 24, 2024 and sell it today you would lose (2,115) from holding Futura Medical or give up 39.98% of portfolio value over 90 days.

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

Futura Medical  vs.  Cornish Metals

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.

Cornish Metals

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cornish Metals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Cornish Metals may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Futura Medical and Cornish Metals

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

The idea behind Futura Medical and Cornish Metals 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.