Correlation Between Pembina Pipeline and Profound Medical

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

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

Diversification Opportunities for Pembina Pipeline and Profound Medical

0.11

Correlation Coefficient

Pembina Pipeline  Profound Medical

Average diversification

The 3 months correlation between Pembina and Profound is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Pembina Pipeline Corp and Profound Medical Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Profound Medical Corp and Pembina Pipeline 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 Pembina Pipeline Corp are associated (or correlated) with Profound Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Profound Medical Corp has no effect on the direction of Pembina Pipeline i.e., Pembina Pipeline and Profound Medical go up and down completely randomly.

Pair Corralation between Pembina Pipeline and Profound Medical

Assuming the 90 days trading horizon Pembina Pipeline Corp is expected to generate 0.23 times more return on investment than Profound Medical. However, Pembina Pipeline Corp is 4.32 times less risky than Profound Medical. It trades about 0.09 of its potential returns per unit of risk. Profound Medical Corp is currently generating about 0.01 per unit of risk. If you would invest  3,810  in Pembina Pipeline Corp on October 5, 2024 and sell it today you would earn a total of  1,535  from holding Pembina Pipeline Corp or generate 40.29% return on investment over 90 days.

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

Pembina Pipeline Corp  vs.  Profound Medical Corp

Pembina Pipeline Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pembina Pipeline Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's essential indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Profound Medical Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Profound Medical Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Profound Medical displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pembina Pipeline and Profound Medical

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

The idea behind Pembina Pipeline Corp and Profound Medical Corp 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.

Check out your portfolio center.

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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.