Correlation Between MEDICAL FACILITIES and AUTO TRADER
Can any of the company-specific risk be diversified away by investing in both MEDICAL FACILITIES and AUTO TRADER 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 MEDICAL FACILITIES and AUTO TRADER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MEDICAL FACILITIES NEW and AUTO TRADER ADR, you can compare the effects of market volatilities on MEDICAL FACILITIES and AUTO TRADER 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 MEDICAL FACILITIES with a short position of AUTO TRADER. Check out your portfolio center. Please also check ongoing floating volatility patterns of MEDICAL FACILITIES and AUTO TRADER.
Diversification Opportunities for MEDICAL FACILITIES and AUTO TRADER
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MEDICAL and AUTO is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding MEDICAL FACILITIES NEW and AUTO TRADER ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AUTO TRADER ADR and MEDICAL FACILITIES 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 MEDICAL FACILITIES NEW are associated (or correlated) with AUTO TRADER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AUTO TRADER ADR has no effect on the direction of MEDICAL FACILITIES i.e., MEDICAL FACILITIES and AUTO TRADER go up and down completely randomly.
Pair Corralation between MEDICAL FACILITIES and AUTO TRADER
Assuming the 90 days horizon MEDICAL FACILITIES NEW is expected to generate 1.17 times more return on investment than AUTO TRADER. However, MEDICAL FACILITIES is 1.17 times more volatile than AUTO TRADER ADR. It trades about 0.23 of its potential returns per unit of risk. AUTO TRADER ADR is currently generating about -0.09 per unit of risk. If you would invest 960.00 in MEDICAL FACILITIES NEW on August 29, 2024 and sell it today you would earn a total of 120.00 from holding MEDICAL FACILITIES NEW or generate 12.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MEDICAL FACILITIES NEW vs. AUTO TRADER ADR
Performance |
| Timeline |
| MEDICAL FACILITIES NEW |
| AUTO TRADER ADR |
MEDICAL FACILITIES and AUTO TRADER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MEDICAL FACILITIES and AUTO TRADER
The main advantage of trading using opposite MEDICAL FACILITIES and AUTO TRADER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MEDICAL FACILITIES position performs unexpectedly, AUTO TRADER 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 AUTO TRADER will offset losses from the drop in AUTO TRADER's long position.| MEDICAL FACILITIES vs. Ramsay Health Care | MEDICAL FACILITIES vs. Superior Plus Corp | MEDICAL FACILITIES vs. NMI Holdings | MEDICAL FACILITIES vs. Origin Agritech |
| AUTO TRADER vs. TITANIUM TRANSPORTGROUP | AUTO TRADER vs. Tencent Music Entertainment | AUTO TRADER vs. NTG Nordic Transport | AUTO TRADER vs. Fukuyama Transporting Co |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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