Correlation Between Advanced Medical and Occidental Petroleum

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Can any of the company-specific risk be diversified away by investing in both Advanced Medical and Occidental Petroleum 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 Occidental Petroleum 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 Occidental Petroleum, you can compare the effects of market volatilities on Advanced Medical and Occidental Petroleum 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 Occidental Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Medical and Occidental Petroleum.

Diversification Opportunities for Advanced Medical and Occidental Petroleum

0.44
  Correlation Coefficient

Very weak diversification

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

Pair Corralation between Advanced Medical and Occidental Petroleum

Assuming the 90 days trading horizon Advanced Medical Solutions is expected to generate 1.1 times more return on investment than Occidental Petroleum. However, Advanced Medical is 1.1 times more volatile than Occidental Petroleum. It trades about 0.1 of its potential returns per unit of risk. Occidental Petroleum is currently generating about 0.06 per unit of risk. If you would invest  206.00  in Advanced Medical Solutions on April 23, 2025 and sell it today you would earn a total of  30.00  from holding Advanced Medical Solutions or generate 14.56% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy98.44%
ValuesDaily Returns

Advanced Medical Solutions  vs.  Occidental Petroleum

 Performance 
       Timeline  
Advanced Medical Sol 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
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 fragile basic indicators, Advanced Medical unveiled solid returns over the last few months and may actually be approaching a breakup point.
Occidental Petroleum 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Occidental Petroleum are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Occidental Petroleum may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Advanced Medical and Occidental Petroleum Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Advanced Medical and Occidental Petroleum

The main advantage of trading using opposite Advanced Medical and Occidental Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Medical position performs unexpectedly, Occidental Petroleum 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 Occidental Petroleum will offset losses from the drop in Occidental Petroleum's long position.
The idea behind Advanced Medical Solutions and Occidental Petroleum 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.

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