Correlation Between Allgens Medical and Winner Medical

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

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

Diversification Opportunities for Allgens Medical and Winner Medical

0.88

Correlation Coefficient

Allgens Medical  Winner Medical

Very poor diversification

The 3 months correlation between Allgens and Winner is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Allgens Medical Technology and Winner Medical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Winner Medical and Allgens 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 Allgens Medical Technology are associated (or correlated) with Winner Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Winner Medical has no effect on the direction of Allgens Medical i.e., Allgens Medical and Winner Medical go up and down completely randomly.

Pair Corralation between Allgens Medical and Winner Medical

Assuming the 90 days trading horizon Allgens Medical is expected to generate 1.64 times less return on investment than Winner Medical. But when comparing it to its historical volatility, Allgens Medical Technology is 1.21 times less risky than Winner Medical. It trades about 0.13 of its potential returns per unit of risk. Winner Medical Co is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  2,832  in Winner Medical Co on September 27, 2024 and sell it today you would earn a total of  1,363  from holding Winner Medical Co or generate 48.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.33%
Values	Daily Returns

Allgens Medical Technology  vs.  Winner Medical Co

Allgens Medical Tech

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Allgens Medical Technology are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Allgens Medical sustained solid returns over the last few months and may actually be approaching a breakup point.

Winner Medical

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Winner Medical Co are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Winner Medical sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Allgens Medical and Winner Medical

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

The idea behind Allgens Medical Technology and Winner Medical Co 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.