Correlation Between Medical Facilities and Advent Wireless

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

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

Diversification Opportunities for Medical Facilities and Advent Wireless

-0.31

Correlation Coefficient

Medical Facilities  Advent Wireless

Very good diversification

The 3 months correlation between Medical and Advent is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Medical Facilities and Advent Wireless in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advent Wireless and Medical Facilities 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 Medical Facilities are associated (or correlated) with Advent Wireless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advent Wireless has no effect on the direction of Medical Facilities i.e., Medical Facilities and Advent Wireless go up and down completely randomly.

Pair Corralation between Medical Facilities and Advent Wireless

Assuming the 90 days horizon Medical Facilities is expected to generate 0.36 times more return on investment than Advent Wireless. However, Medical Facilities is 2.79 times less risky than Advent Wireless. It trades about -0.04 of its potential returns per unit of risk. Advent Wireless is currently generating about -0.15 per unit of risk. If you would invest  1,557  in Medical Facilities on April 20, 2025 and sell it today you would lose (35.00) from holding Medical Facilities or give up 2.25% of portfolio value over 90 days.

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

Medical Facilities  vs.  Advent Wireless

Medical Facilities

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Medical Facilities are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Medical Facilities is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Advent Wireless

Risk-Adjusted Performance

Very Weak

Over the last 90 days Advent Wireless has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating 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.

Pair Trading with Medical Facilities and Advent Wireless

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

The idea behind Medical Facilities and Advent Wireless 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.