Correlation Between Advent Wireless and Profound Medical

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

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

Diversification Opportunities for Advent Wireless and Profound Medical

0.36

Correlation Coefficient

Advent Wireless  Profound Medical

Weak diversification

The 3 months correlation between Advent and Profound is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Advent Wireless and Profound Medical Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Profound Medical Corp and Advent Wireless 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 Advent Wireless are associated (or correlated) with Profound Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Profound Medical Corp has no effect on the direction of Advent Wireless i.e., Advent Wireless and Profound Medical go up and down completely randomly.

Pair Corralation between Advent Wireless and Profound Medical

Assuming the 90 days horizon Advent Wireless is expected to generate 1.65 times more return on investment than Profound Medical. However, Advent Wireless is 1.65 times more volatile than Profound Medical Corp. It trades about 0.02 of its potential returns per unit of risk. Profound Medical Corp is currently generating about 0.02 per unit of risk. If you would invest  65.00  in Advent Wireless on September 23, 2024 and sell it today you would earn a total of  0.00  from holding Advent Wireless or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Advent Wireless  vs.  Profound Medical Corp

Advent Wireless

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Advent Wireless are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Advent Wireless may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Profound Medical Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Profound Medical Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Profound Medical is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Advent Wireless and Profound Medical

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

The idea behind Advent Wireless and Profound Medical Corp 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .