Correlation Between BM European and Advanced Medical

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

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

Diversification Opportunities for BM European and Advanced Medical

-0.44

Correlation Coefficient

BM European  Advanced Medical

Very good diversification

The 3 months correlation between BME and Advanced is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding BM European Value and Advanced Medical Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Medical Sol and BM European 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 BM European Value are associated (or correlated) with Advanced Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Medical Sol has no effect on the direction of BM European i.e., BM European and Advanced Medical go up and down completely randomly.

Pair Corralation between BM European and Advanced Medical

Assuming the 90 days trading horizon BM European Value is expected to generate 0.63 times more return on investment than Advanced Medical. However, BM European Value is 1.58 times less risky than Advanced Medical. It trades about 0.48 of its potential returns per unit of risk. Advanced Medical Solutions is currently generating about 0.11 per unit of risk. If you would invest  28,600  in BM European Value on February 10, 2025 and sell it today you would earn a total of  4,930  from holding BM European Value or generate 17.24% return on investment over 90 days.

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

BM European Value  vs.  Advanced Medical Solutions

BM European Value

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BM European Value are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, BM European may actually be approaching a critical reversion point that can send shares even higher in June 2025.

Advanced Medical Sol

Risk-Adjusted Performance

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 rather sound technical and fundamental indicators, Advanced Medical is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with BM European and Advanced Medical

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

The idea behind BM European Value and Advanced Medical Solutions 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.