Correlation Between Aethlon Medical and Cerus

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Can any of the company-specific risk be diversified away by investing in both Aethlon Medical and Cerus 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 Aethlon Medical and Cerus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aethlon Medical and Cerus, you can compare the effects of market volatilities on Aethlon Medical and Cerus 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 Aethlon Medical with a short position of Cerus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aethlon Medical and Cerus.

Diversification Opportunities for Aethlon Medical and Cerus

-0.17
  Correlation Coefficient

Good diversification

The 3 months correlation between Aethlon and Cerus is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Aethlon Medical and Cerus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cerus and Aethlon 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 Aethlon Medical are associated (or correlated) with Cerus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cerus has no effect on the direction of Aethlon Medical i.e., Aethlon Medical and Cerus go up and down completely randomly.

Pair Corralation between Aethlon Medical and Cerus

Given the investment horizon of 90 days Aethlon Medical is expected to generate 2.64 times more return on investment than Cerus. However, Aethlon Medical is 2.64 times more volatile than Cerus. It trades about 0.05 of its potential returns per unit of risk. Cerus is currently generating about -0.02 per unit of risk. If you would invest  42.00  in Aethlon Medical on September 21, 2024 and sell it today you would earn a total of  1.00  from holding Aethlon Medical or generate 2.38% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Aethlon Medical  vs.  Cerus

 Performance 
       Timeline  
Aethlon Medical 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Aethlon Medical are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady primary indicators, Aethlon Medical exhibited solid returns over the last few months and may actually be approaching a breakup point.
Cerus 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Cerus has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Cerus is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Aethlon Medical and Cerus Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Aethlon Medical and Cerus

The main advantage of trading using opposite Aethlon Medical and Cerus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aethlon Medical position performs unexpectedly, Cerus 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 Cerus will offset losses from the drop in Cerus' long position.
The idea behind Aethlon Medical and Cerus 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.

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