Correlation Between Affluent Medical and Innelec Multimedia

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

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

Diversification Opportunities for Affluent Medical and Innelec Multimedia

0.5

Correlation Coefficient

Affluent Medical  Innelec Multimedia

Very weak diversification

The 3 months correlation between Affluent and Innelec is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Affluent Medical SAS and Innelec Multimedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innelec Multimedia and Affluent 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 Affluent Medical SAS are associated (or correlated) with Innelec Multimedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innelec Multimedia has no effect on the direction of Affluent Medical i.e., Affluent Medical and Innelec Multimedia go up and down completely randomly.

Pair Corralation between Affluent Medical and Innelec Multimedia

Assuming the 90 days trading horizon Affluent Medical is expected to generate 13.88 times less return on investment than Innelec Multimedia. In addition to that, Affluent Medical is 1.25 times more volatile than Innelec Multimedia. It trades about 0.01 of its total potential returns per unit of risk. Innelec Multimedia is currently generating about 0.22 per unit of volatility. If you would invest  283.00  in Innelec Multimedia on September 28, 2024 and sell it today you would earn a total of  67.00  from holding Innelec Multimedia or generate 23.67% return on investment over 90 days.

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

Affluent Medical SAS  vs.  Innelec Multimedia

Affluent Medical SAS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Affluent Medical SAS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Innelec Multimedia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Innelec Multimedia has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Innelec Multimedia is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Affluent Medical and Innelec Multimedia

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

The idea behind Affluent Medical SAS and Innelec Multimedia 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.