Correlation Between Athens Medical and Alpha Trust

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

By analyzing existing cross correlation between Athens Medical CSA and Alpha Trust Andromeda, you can compare the effects of market volatilities on Athens Medical and Alpha Trust 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 Athens Medical with a short position of Alpha Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Athens Medical and Alpha Trust.

Diversification Opportunities for Athens Medical and Alpha Trust

0.29

Correlation Coefficient

Athens Medical  Alpha Trust

Modest diversification

The 3 months correlation between Athens and Alpha is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Athens Medical CSA and Alpha Trust Andromeda in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha Trust Andromeda and Athens 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 Athens Medical CSA are associated (or correlated) with Alpha Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha Trust Andromeda has no effect on the direction of Athens Medical i.e., Athens Medical and Alpha Trust go up and down completely randomly.

Pair Corralation between Athens Medical and Alpha Trust

Assuming the 90 days trading horizon Athens Medical CSA is expected to under-perform the Alpha Trust. In addition to that, Athens Medical is 1.88 times more volatile than Alpha Trust Andromeda. It trades about -0.05 of its total potential returns per unit of risk. Alpha Trust Andromeda is currently generating about 0.06 per unit of volatility. If you would invest  655.00  in Alpha Trust Andromeda on February 19, 2024 and sell it today you would earn a total of  19.00  from holding Alpha Trust Andromeda or generate 2.9% return on investment over 90 days.

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

Athens Medical CSA  vs.  Alpha Trust Andromeda

Athens Medical CSA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Alpha Trust Andromeda

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alpha Trust Andromeda are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Alpha Trust is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Athens Medical and Alpha Trust

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

The idea behind Athens Medical CSA and Alpha Trust Andromeda 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.