Correlation Between Standard Chartered and Advanced Medical

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

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

Diversification Opportunities for Standard Chartered and Advanced Medical

-0.07

Correlation Coefficient

Standard Chartered  Advanced Medical

Good diversification

The 3 months correlation between Standard and Advanced is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Standard Chartered PLC 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 Standard Chartered 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 Standard Chartered PLC 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 Standard Chartered i.e., Standard Chartered and Advanced Medical go up and down completely randomly.

Pair Corralation between Standard Chartered and Advanced Medical

Assuming the 90 days trading horizon Standard Chartered PLC is expected to generate 0.34 times more return on investment than Advanced Medical. However, Standard Chartered PLC is 2.92 times less risky than Advanced Medical. It trades about 0.3 of its potential returns per unit of risk. Advanced Medical Solutions is currently generating about 0.08 per unit of risk. If you would invest  85,300  in Standard Chartered PLC on October 25, 2024 and sell it today you would earn a total of  21,200  from holding Standard Chartered PLC or generate 24.85% return on investment over 90 days.

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

Standard Chartered PLC  vs.  Advanced Medical Solutions

Standard Chartered PLC

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Standard Chartered PLC are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Standard Chartered unveiled solid returns over the last few months and may actually be approaching a breakup point.

Advanced Medical Sol

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Medical Solutions are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Advanced Medical exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Standard Chartered and Advanced Medical

The main advantage of trading using opposite Standard Chartered and Advanced Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Standard Chartered 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 Standard Chartered PLC 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..