Correlation Between AFFLUENT MEDICAL and China Medical

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

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

Diversification Opportunities for AFFLUENT MEDICAL and China Medical

0.44

Correlation Coefficient

AFFLUENT MEDICAL  China Medical

Very weak diversification

The 3 months correlation between AFFLUENT and China is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding AFFLUENT MEDICAL SAS and China Medical System in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Medical System and AFFLUENT 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 AFFLUENT MEDICAL SAS are associated (or correlated) with China Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Medical System has no effect on the direction of AFFLUENT MEDICAL i.e., AFFLUENT MEDICAL and China Medical go up and down completely randomly.

Pair Corralation between AFFLUENT MEDICAL and China Medical

Assuming the 90 days horizon AFFLUENT MEDICAL SAS is expected to under-perform the China Medical. But the stock apears to be less risky and, when comparing its historical volatility, AFFLUENT MEDICAL SAS is 1.44 times less risky than China Medical. The stock trades about 0.0 of its potential returns per unit of risk. The China Medical System is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  86.00  in China Medical System on March 30, 2025 and sell it today you would earn a total of  43.00  from holding China Medical System or generate 50.0% return on investment over 90 days.

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

AFFLUENT MEDICAL SAS  vs.  China Medical System

AFFLUENT MEDICAL SAS

Risk-Adjusted Performance

Very Weak

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

China Medical System

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in China Medical System are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, China Medical reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AFFLUENT MEDICAL and China Medical

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

The idea behind AFFLUENT MEDICAL SAS and China Medical System 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.