Correlation Between INDUSTRIAL MEDICAL and SECURE ELECTRONIC

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

By analyzing existing cross correlation between INDUSTRIAL MEDICAL GASES and SECURE ELECTRONIC TECHNOLOGY, you can compare the effects of market volatilities on INDUSTRIAL MEDICAL and SECURE ELECTRONIC 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 INDUSTRIAL MEDICAL with a short position of SECURE ELECTRONIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of INDUSTRIAL MEDICAL and SECURE ELECTRONIC.

Diversification Opportunities for INDUSTRIAL MEDICAL and SECURE ELECTRONIC

-0.3

Correlation Coefficient

INDUSTRIAL MEDICAL  SECURE ELECTRONIC

Very good diversification

The 3 months correlation between INDUSTRIAL and SECURE is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding INDUSTRIAL MEDICAL GASES and SECURE ELECTRONIC TECHNOLOGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SECURE ELECTRONIC and INDUSTRIAL 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 INDUSTRIAL MEDICAL GASES are associated (or correlated) with SECURE ELECTRONIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SECURE ELECTRONIC has no effect on the direction of INDUSTRIAL MEDICAL i.e., INDUSTRIAL MEDICAL and SECURE ELECTRONIC go up and down completely randomly.

Pair Corralation between INDUSTRIAL MEDICAL and SECURE ELECTRONIC

Assuming the 90 days trading horizon INDUSTRIAL MEDICAL GASES is expected to generate 0.22 times more return on investment than SECURE ELECTRONIC. However, INDUSTRIAL MEDICAL GASES is 4.48 times less risky than SECURE ELECTRONIC. It trades about 0.13 of its potential returns per unit of risk. SECURE ELECTRONIC TECHNOLOGY is currently generating about -0.05 per unit of risk. If you would invest  3,500  in INDUSTRIAL MEDICAL GASES on September 14, 2024 and sell it today you would earn a total of  295.00  from holding INDUSTRIAL MEDICAL GASES or generate 8.43% return on investment over 90 days.

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

INDUSTRIAL MEDICAL GASES  vs.  SECURE ELECTRONIC TECHNOLOGY

INDUSTRIAL MEDICAL GASES

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in INDUSTRIAL MEDICAL GASES are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, INDUSTRIAL MEDICAL may actually be approaching a critical reversion point that can send shares even higher in January 2025.

SECURE ELECTRONIC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SECURE ELECTRONIC TECHNOLOGY has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with INDUSTRIAL MEDICAL and SECURE ELECTRONIC

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

The idea behind INDUSTRIAL MEDICAL GASES and SECURE ELECTRONIC TECHNOLOGY 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.