Correlation Between Profound Medical and Northstar Clean

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

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

Diversification Opportunities for Profound Medical and Northstar Clean

0.27

Correlation Coefficient

Profound Medical  Northstar Clean

Modest diversification

The 3 months correlation between Profound and Northstar is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Profound Medical Corp and Northstar Clean Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northstar Clean Tech and Profound 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 Profound Medical Corp are associated (or correlated) with Northstar Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northstar Clean Tech has no effect on the direction of Profound Medical i.e., Profound Medical and Northstar Clean go up and down completely randomly.

Pair Corralation between Profound Medical and Northstar Clean

Assuming the 90 days trading horizon Profound Medical is expected to generate 8.95 times less return on investment than Northstar Clean. But when comparing it to its historical volatility, Profound Medical Corp is 1.45 times less risky than Northstar Clean. It trades about 0.04 of its potential returns per unit of risk. Northstar Clean Technologies is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  23.00  in Northstar Clean Technologies on September 23, 2024 and sell it today you would earn a total of  12.00  from holding Northstar Clean Technologies or generate 52.17% return on investment over 90 days.

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

Profound Medical Corp  vs.  Northstar Clean Technologies

Profound Medical Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Profound Medical Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Profound Medical is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Northstar Clean Tech

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Northstar Clean Technologies are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Northstar Clean showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Profound Medical and Northstar Clean

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

The idea behind Profound Medical Corp and Northstar Clean Technologies 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.