Correlation Between Advanced Medical and Eastinco Mining

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

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

Diversification Opportunities for Advanced Medical and Eastinco Mining

0.26

Correlation Coefficient

Advanced Medical  Eastinco Mining

Modest diversification

The 3 months correlation between Advanced and Eastinco is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Medical Solutions and Eastinco Mining Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastinco Mining Expl and Advanced 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 Advanced Medical Solutions are associated (or correlated) with Eastinco Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastinco Mining Expl has no effect on the direction of Advanced Medical i.e., Advanced Medical and Eastinco Mining go up and down completely randomly.

Pair Corralation between Advanced Medical and Eastinco Mining

Assuming the 90 days trading horizon Advanced Medical Solutions is expected to under-perform the Eastinco Mining. In addition to that, Advanced Medical is 1.35 times more volatile than Eastinco Mining Exploration. It trades about -0.06 of its total potential returns per unit of risk. Eastinco Mining Exploration is currently generating about 0.04 per unit of volatility. If you would invest  4,900  in Eastinco Mining Exploration on September 19, 2024 and sell it today you would earn a total of  50.00  from holding Eastinco Mining Exploration or generate 1.02% return on investment over 90 days.

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

Advanced Medical Solutions  vs.  Eastinco Mining Exploration

Advanced Medical Sol

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Advanced Medical Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Eastinco Mining Expl

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eastinco Mining Exploration has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Advanced Medical and Eastinco Mining

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

The idea behind Advanced Medical Solutions and Eastinco Mining Exploration 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.