Correlation Between American Shared and Aesthetic Medical

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

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

Diversification Opportunities for American Shared and Aesthetic Medical

-0.12

Correlation Coefficient

American Shared  Aesthetic Medical

Good diversification

The 3 months correlation between American and Aesthetic is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding American Shared Hospital and Aesthetic Medical Intl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aesthetic Medical Intl and American Shared 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 American Shared Hospital are associated (or correlated) with Aesthetic Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aesthetic Medical Intl has no effect on the direction of American Shared i.e., American Shared and Aesthetic Medical go up and down completely randomly.

Pair Corralation between American Shared and Aesthetic Medical

Considering the 90-day investment horizon American Shared is expected to generate 2.12 times less return on investment than Aesthetic Medical. But when comparing it to its historical volatility, American Shared Hospital is 3.73 times less risky than Aesthetic Medical. It trades about 0.23 of its potential returns per unit of risk. Aesthetic Medical Intl is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  34.00  in Aesthetic Medical Intl on January 19, 2024 and sell it today you would earn a total of  7.00  from holding Aesthetic Medical Intl or generate 20.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

American Shared Hospital  vs.  Aesthetic Medical Intl

American Shared Hospital

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in American Shared Hospital are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak primary indicators, American Shared may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Aesthetic Medical Intl

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aesthetic Medical Intl has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in May 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with American Shared and Aesthetic Medical

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

The idea behind American Shared Hospital and Aesthetic Medical Intl 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.