Correlation Between Asustek Computer and MedFirst Healthcare
Can any of the company-specific risk be diversified away by investing in both Asustek Computer and MedFirst Healthcare 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 Asustek Computer and MedFirst Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asustek Computer and MedFirst Healthcare Services, you can compare the effects of market volatilities on Asustek Computer and MedFirst Healthcare 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 Asustek Computer with a short position of MedFirst Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asustek Computer and MedFirst Healthcare.
Diversification Opportunities for Asustek Computer and MedFirst Healthcare
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Asustek and MedFirst is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Asustek Computer and MedFirst Healthcare Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MedFirst Healthcare and Asustek Computer 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 Asustek Computer are associated (or correlated) with MedFirst Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MedFirst Healthcare has no effect on the direction of Asustek Computer i.e., Asustek Computer and MedFirst Healthcare go up and down completely randomly.
Pair Corralation between Asustek Computer and MedFirst Healthcare
Assuming the 90 days trading horizon Asustek Computer is expected to generate 1.17 times more return on investment than MedFirst Healthcare. However, Asustek Computer is 1.17 times more volatile than MedFirst Healthcare Services. It trades about 0.09 of its potential returns per unit of risk. MedFirst Healthcare Services is currently generating about 0.0 per unit of risk. If you would invest 26,750 in Asustek Computer on September 3, 2024 and sell it today you would earn a total of 32,050 from holding Asustek Computer or generate 119.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asustek Computer vs. MedFirst Healthcare Services
Performance |
| Timeline |
| Asustek Computer |
| MedFirst Healthcare |
Asustek Computer and MedFirst Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asustek Computer and MedFirst Healthcare
The main advantage of trading using opposite Asustek Computer and MedFirst Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asustek Computer position performs unexpectedly, MedFirst Healthcare 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 MedFirst Healthcare will offset losses from the drop in MedFirst Healthcare's long position.| Asustek Computer vs. Taiwan Semiconductor Manufacturing | Asustek Computer vs. Yang Ming Marine | Asustek Computer vs. ASE Industrial Holding | Asustek Computer vs. AU Optronics |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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