Correlation Between PRINCIPAL FINANCIAL and Advanced Medical

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

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

Diversification Opportunities for PRINCIPAL FINANCIAL and Advanced Medical

0.15

Correlation Coefficient

PRINCIPAL FINANCIAL  Advanced Medical

Average diversification

The 3 months correlation between PRINCIPAL and Advanced is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding PRINCIPAL FINANCIAL and Advanced Medical Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Medical Sol and PRINCIPAL FINANCIAL 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 PRINCIPAL FINANCIAL are associated (or correlated) with Advanced Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Medical Sol has no effect on the direction of PRINCIPAL FINANCIAL i.e., PRINCIPAL FINANCIAL and Advanced Medical go up and down completely randomly.

Pair Corralation between PRINCIPAL FINANCIAL and Advanced Medical

Assuming the 90 days trading horizon PRINCIPAL FINANCIAL is expected to generate 2.38 times less return on investment than Advanced Medical. But when comparing it to its historical volatility, PRINCIPAL FINANCIAL is 1.78 times less risky than Advanced Medical. It trades about 0.06 of its potential returns per unit of risk. Advanced Medical Solutions is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  208.00  in Advanced Medical Solutions on April 24, 2025 and sell it today you would earn a total of  24.00  from holding Advanced Medical Solutions or generate 11.54% return on investment over 90 days.

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

PRINCIPAL FINANCIAL  vs.  Advanced Medical Solutions

PRINCIPAL FINANCIAL

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PRINCIPAL FINANCIAL are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, PRINCIPAL FINANCIAL is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

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 6 (%) 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.

Pair Trading with PRINCIPAL FINANCIAL and Advanced Medical

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

The idea behind PRINCIPAL FINANCIAL and Advanced Medical Solutions 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.