Correlation Between CHAR Technologies and Profound Medical

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

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

Diversification Opportunities for CHAR Technologies and Profound Medical

-0.12

Correlation Coefficient

CHAR Technologies  Profound Medical

Good diversification

The 3 months correlation between CHAR and Profound is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding CHAR Technologies 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 CHAR Technologies 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 CHAR Technologies 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 CHAR Technologies i.e., CHAR Technologies and Profound Medical go up and down completely randomly.

Pair Corralation between CHAR Technologies and Profound Medical

Assuming the 90 days horizon CHAR Technologies is expected to under-perform the Profound Medical. In addition to that, CHAR Technologies is 1.18 times more volatile than Profound Medical Corp. It trades about -0.02 of its total potential returns per unit of risk. Profound Medical Corp is currently generating about 0.0 per unit of volatility. If you would invest  1,610  in Profound Medical Corp on October 5, 2024 and sell it today you would lose (467.00) from holding Profound Medical Corp or give up 29.01% of portfolio value over 90 days.

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

CHAR Technologies  vs.  Profound Medical Corp

CHAR Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CHAR Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Profound Medical Corp

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Profound Medical Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Profound Medical displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CHAR Technologies and Profound Medical

The main advantage of trading using opposite CHAR Technologies and Profound Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHAR Technologies 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 CHAR Technologies 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.