Correlation Between Medical Packaging and Industrial Engineering

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

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

Diversification Opportunities for Medical Packaging and Industrial Engineering

0.23

Correlation Coefficient

Medical Packaging  Industrial Engineering

Modest diversification

The 3 months correlation between Medical and Industrial is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Medical Packaging and Industrial Engineering Project in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial Engineering and Medical Packaging 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 Medical Packaging are associated (or correlated) with Industrial Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial Engineering has no effect on the direction of Medical Packaging i.e., Medical Packaging and Industrial Engineering go up and down completely randomly.

Pair Corralation between Medical Packaging and Industrial Engineering

Assuming the 90 days trading horizon Medical Packaging is expected to generate 1.29 times more return on investment than Industrial Engineering. However, Medical Packaging is 1.29 times more volatile than Industrial Engineering Projects. It trades about 0.06 of its potential returns per unit of risk. Industrial Engineering Projects is currently generating about 0.0 per unit of risk. If you would invest  71.00  in Medical Packaging on September 13, 2024 and sell it today you would earn a total of  53.00  from holding Medical Packaging or generate 74.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	48.44%
Values	Daily Returns

Medical Packaging  vs.  Industrial Engineering Project

Medical Packaging

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Medical Packaging has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Industrial Engineering

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Industrial Engineering Projects has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Industrial Engineering is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Medical Packaging and Industrial Engineering

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

The idea behind Medical Packaging and Industrial Engineering Projects 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.