Correlation Between Koninklijke Philips and Aethlon Medical

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

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

Diversification Opportunities for Koninklijke Philips and Aethlon Medical

-0.83

Correlation Coefficient

Koninklijke Philips  Aethlon Medical

Pay attention - limited upside

The 3 months correlation between Koninklijke and Aethlon is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Koninklijke Philips NV and Aethlon Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aethlon Medical and Koninklijke Philips 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 Koninklijke Philips NV 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 Koninklijke Philips i.e., Koninklijke Philips and Aethlon Medical go up and down completely randomly.

Pair Corralation between Koninklijke Philips and Aethlon Medical

Considering the 90-day investment horizon Koninklijke Philips NV is expected to generate 0.48 times more return on investment than Aethlon Medical. However, Koninklijke Philips NV is 2.07 times less risky than Aethlon Medical. It trades about 0.16 of its potential returns per unit of risk. Aethlon Medical is currently generating about -0.24 per unit of risk. If you would invest  1,923  in Koninklijke Philips NV on February 28, 2024 and sell it today you would earn a total of  775.00  from holding Koninklijke Philips NV or generate 40.3% return on investment over 90 days.

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

Koninklijke Philips NV  vs.  Aethlon Medical

Koninklijke Philips

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Koninklijke Philips NV are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal technical indicators, Koninklijke Philips reported solid returns over the last few months and may actually be approaching a breakup point.

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 June 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Koninklijke Philips and Aethlon Medical

The main advantage of trading using opposite Koninklijke Philips and Aethlon Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Koninklijke Philips 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 Koninklijke Philips NV 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.