Correlation Between Morgan Advanced and Surgical Science

Can any of the company-specific risk be diversified away by investing in both Morgan Advanced and Surgical Science 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 Morgan Advanced and Surgical Science into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Morgan Advanced Materials and Surgical Science Sweden, you can compare the effects of market volatilities on Morgan Advanced and Surgical Science 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 Morgan Advanced with a short position of Surgical Science. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Advanced and Surgical Science.

Diversification Opportunities for Morgan Advanced and Surgical Science

0.85

Correlation Coefficient

Morgan Advanced  Surgical Science

Very poor diversification

The 3 months correlation between Morgan and Surgical is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Advanced Materials and Surgical Science Sweden in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Surgical Science Sweden and Morgan Advanced 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 Morgan Advanced Materials are associated (or correlated) with Surgical Science. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Surgical Science Sweden has no effect on the direction of Morgan Advanced i.e., Morgan Advanced and Surgical Science go up and down completely randomly.

Pair Corralation between Morgan Advanced and Surgical Science

Assuming the 90 days trading horizon Morgan Advanced is expected to generate 5.87 times less return on investment than Surgical Science. But when comparing it to its historical volatility, Morgan Advanced Materials is 2.63 times less risky than Surgical Science. It trades about 0.09 of its potential returns per unit of risk. Surgical Science Sweden is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  11,900  in Surgical Science Sweden on October 10, 2024 and sell it today you would earn a total of  4,290  from holding Surgical Science Sweden or generate 36.05% return on investment over 90 days.

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

Morgan Advanced Materials  vs.  Surgical Science Sweden

Morgan Advanced Materials

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Advanced Materials are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Morgan Advanced is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Surgical Science Sweden

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Surgical Science Sweden has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively weak basic indicators, Surgical Science unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Morgan Advanced and Surgical Science

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

The idea behind Morgan Advanced Materials and Surgical Science Sweden 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.