Correlation Between Helius Medical and Algoma Central

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

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

Diversification Opportunities for Helius Medical and Algoma Central

-0.48

Correlation Coefficient

Helius Medical  Algoma Central

Very good diversification

The 3 months correlation between Helius and Algoma is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Helius Medical Technologies and Algoma Central in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Algoma Central and Helius 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 Helius Medical Technologies are associated (or correlated) with Algoma Central. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Algoma Central has no effect on the direction of Helius Medical i.e., Helius Medical and Algoma Central go up and down completely randomly.

Pair Corralation between Helius Medical and Algoma Central

Given the investment horizon of 90 days Helius Medical Technologies is expected to generate 29.57 times more return on investment than Algoma Central. However, Helius Medical is 29.57 times more volatile than Algoma Central. It trades about 0.23 of its potential returns per unit of risk. Algoma Central is currently generating about -0.09 per unit of risk. If you would invest  46.00  in Helius Medical Technologies on September 24, 2024 and sell it today you would earn a total of  45.00  from holding Helius Medical Technologies or generate 97.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Helius Medical Technologies  vs.  Algoma Central

Helius Medical Techn

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Helius Medical Technologies are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent fundamental indicators, Helius Medical unveiled solid returns over the last few months and may actually be approaching a breakup point.

Algoma Central

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Algoma Central are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward-looking indicators, Algoma Central is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Helius Medical and Algoma Central

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

The idea behind Helius Medical Technologies and Algoma Central 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..