Correlation Between SPECTRAL MEDICAL and Advanced Medical

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

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

Diversification Opportunities for SPECTRAL MEDICAL and Advanced Medical

0.12

Correlation Coefficient

SPECTRAL MEDICAL  Advanced Medical

Average diversification

The 3 months correlation between SPECTRAL and Advanced is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding SPECTRAL MEDICAL and Advanced Medical Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Medical Sol and SPECTRAL 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 SPECTRAL MEDICAL are associated (or correlated) with Advanced Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Medical Sol has no effect on the direction of SPECTRAL MEDICAL i.e., SPECTRAL MEDICAL and Advanced Medical go up and down completely randomly.

Pair Corralation between SPECTRAL MEDICAL and Advanced Medical

Assuming the 90 days horizon SPECTRAL MEDICAL is expected to generate 1.98 times more return on investment than Advanced Medical. However, SPECTRAL MEDICAL is 1.98 times more volatile than Advanced Medical Solutions. It trades about 0.04 of its potential returns per unit of risk. Advanced Medical Solutions is currently generating about 0.0 per unit of risk. If you would invest  25.00  in SPECTRAL MEDICAL on October 11, 2024 and sell it today you would earn a total of  11.00  from holding SPECTRAL MEDICAL or generate 44.0% return on investment over 90 days.

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

SPECTRAL MEDICAL  vs.  Advanced Medical Solutions

SPECTRAL MEDICAL

Risk-Adjusted Performance

0 of 100

Very Weak

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

Advanced Medical Sol

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Advanced Medical Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Advanced Medical is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with SPECTRAL MEDICAL and Advanced Medical

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

The idea behind SPECTRAL MEDICAL and Advanced Medical Solutions 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.