Correlation Between Automatic Bank and Insuline Medical

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

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

Diversification Opportunities for Automatic Bank and Insuline Medical

-0.5

Correlation Coefficient

Automatic Bank  Insuline Medical

Very good diversification

The 3 months correlation between Automatic and Insuline is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Bank Services and Insuline Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insuline Medical and Automatic Bank 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 Automatic Bank Services are associated (or correlated) with Insuline Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insuline Medical has no effect on the direction of Automatic Bank i.e., Automatic Bank and Insuline Medical go up and down completely randomly.

Pair Corralation between Automatic Bank and Insuline Medical

Assuming the 90 days trading horizon Automatic Bank Services is expected to generate 0.44 times more return on investment than Insuline Medical. However, Automatic Bank Services is 2.28 times less risky than Insuline Medical. It trades about 0.58 of its potential returns per unit of risk. Insuline Medical is currently generating about 0.02 per unit of risk. If you would invest  141,300  in Automatic Bank Services on September 12, 2024 and sell it today you would earn a total of  118,000  from holding Automatic Bank Services or generate 83.51% return on investment over 90 days.

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

Automatic Bank Services  vs.  Insuline Medical

Automatic Bank Services

Risk-Adjusted Performance

45 of 100

Excellent

Compared to the overall equity markets, risk-adjusted returns on investments in Automatic Bank Services are ranked lower than 45 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Automatic Bank sustained solid returns over the last few months and may actually be approaching a breakup point.

Insuline Medical

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Insuline Medical are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Insuline Medical may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Automatic Bank and Insuline Medical

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

The idea behind Automatic Bank Services and Insuline Medical 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.