Correlation Between PULSION Medical and Air Transport

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

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

Diversification Opportunities for PULSION Medical and Air Transport

0.29

Correlation Coefficient

PULSION Medical  Air Transport

Modest diversification

The 3 months correlation between PULSION and Air is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding PULSION Medical Systems and Air Transport Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Transport Services and PULSION 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 PULSION Medical Systems are associated (or correlated) with Air Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Transport Services has no effect on the direction of PULSION Medical i.e., PULSION Medical and Air Transport go up and down completely randomly.

Pair Corralation between PULSION Medical and Air Transport

Assuming the 90 days trading horizon PULSION Medical Systems is expected to generate 0.75 times more return on investment than Air Transport. However, PULSION Medical Systems is 1.33 times less risky than Air Transport. It trades about 0.02 of its potential returns per unit of risk. Air Transport Services is currently generating about -0.08 per unit of risk. If you would invest  1,620  in PULSION Medical Systems on December 20, 2024 and sell it today you would earn a total of  10.00  from holding PULSION Medical Systems or generate 0.62% return on investment over 90 days.

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

PULSION Medical Systems  vs.  Air Transport Services

PULSION Medical Systems

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PULSION Medical Systems are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, PULSION Medical is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Air Transport Services

Risk-Adjusted Performance

Very Weak

Over the last 90 days Air Transport Services has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Air Transport is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PULSION Medical and Air Transport

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

The idea behind PULSION Medical Systems and Air Transport Services 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.