Correlation Between Rochester Resources and Profound Medical

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

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

Diversification Opportunities for Rochester Resources and Profound Medical

0.01

Correlation Coefficient

Rochester Resources  Profound Medical

Significant diversification

The 3 months correlation between Rochester and Profound is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Rochester Resources 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 Rochester Resources 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 Rochester Resources 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 Rochester Resources i.e., Rochester Resources and Profound Medical go up and down completely randomly.

Pair Corralation between Rochester Resources and Profound Medical

Assuming the 90 days horizon Rochester Resources is expected to generate 7.62 times more return on investment than Profound Medical. However, Rochester Resources is 7.62 times more volatile than Profound Medical Corp. It trades about 0.09 of its potential returns per unit of risk. Profound Medical Corp is currently generating about 0.0 per unit of risk. If you would invest  2.00  in Rochester Resources on December 24, 2024 and sell it today you would earn a total of  0.00  from holding Rochester Resources or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Rochester Resources  vs.  Profound Medical Corp

Rochester Resources

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rochester Resources are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Rochester Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Profound Medical Corp

Risk-Adjusted Performance

Weak

Over the last 90 days Profound Medical Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Profound Medical is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Rochester Resources and Profound Medical

The main advantage of trading using opposite Rochester Resources and Profound Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rochester Resources 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 Rochester Resources 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.

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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.