Correlation Between Advanced Medical and SPORT LISBOA

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

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

Diversification Opportunities for Advanced Medical and SPORT LISBOA

0.59

Correlation Coefficient

Advanced Medical  SPORT LISBOA

Very weak diversification

The 3 months correlation between Advanced and SPORT is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Medical Solutions and SPORT LISBOA E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPORT LISBOA E and Advanced 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 Advanced Medical Solutions are associated (or correlated) with SPORT LISBOA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPORT LISBOA E has no effect on the direction of Advanced Medical i.e., Advanced Medical and SPORT LISBOA go up and down completely randomly.

Pair Corralation between Advanced Medical and SPORT LISBOA

Assuming the 90 days trading horizon Advanced Medical is expected to generate 2.92 times less return on investment than SPORT LISBOA. But when comparing it to its historical volatility, Advanced Medical Solutions is 1.6 times less risky than SPORT LISBOA. It trades about 0.1 of its potential returns per unit of risk. SPORT LISBOA E is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  370.00  in SPORT LISBOA E on April 20, 2025 and sell it today you would earn a total of  182.00  from holding SPORT LISBOA E or generate 49.19% return on investment over 90 days.

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

Advanced Medical Solutions  vs.  SPORT LISBOA E

Advanced Medical Sol

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Medical Solutions are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Advanced Medical unveiled solid returns over the last few months and may actually be approaching a breakup point.

SPORT LISBOA E

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SPORT LISBOA E are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, SPORT LISBOA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Advanced Medical and SPORT LISBOA

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

The idea behind Advanced Medical Solutions and SPORT LISBOA E 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.