Correlation Between AmerisourceBergen and Aethlon Medical

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

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

Diversification Opportunities for AmerisourceBergen and Aethlon Medical

0.18

Correlation Coefficient

AmerisourceBergen  Aethlon Medical

Average diversification

The 3 months correlation between AmerisourceBergen and Aethlon is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding AmerisourceBergen and Aethlon Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aethlon Medical and AmerisourceBergen 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 AmerisourceBergen are associated (or correlated) with Aethlon Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aethlon Medical has no effect on the direction of AmerisourceBergen i.e., AmerisourceBergen and Aethlon Medical go up and down completely randomly.

Pair Corralation between AmerisourceBergen and Aethlon Medical

Considering the 90-day investment horizon AmerisourceBergen is expected to generate 0.2 times more return on investment than Aethlon Medical. However, AmerisourceBergen is 5.08 times less risky than Aethlon Medical. It trades about 0.06 of its potential returns per unit of risk. Aethlon Medical is currently generating about -0.04 per unit of risk. If you would invest  14,474  in AmerisourceBergen on January 25, 2024 and sell it today you would earn a total of  3,524  from holding AmerisourceBergen or generate 24.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	65.61%
Values	Daily Returns

AmerisourceBergen  vs.  Aethlon Medical

AmerisourceBergen

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AmerisourceBergen has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, AmerisourceBergen is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Aethlon Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aethlon Medical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in May 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with AmerisourceBergen and Aethlon Medical

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

The idea behind AmerisourceBergen and Aethlon Medical 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.