Correlation Between ABC Taiwan and Pacific Hospital
Can any of the company-specific risk be diversified away by investing in both ABC Taiwan and Pacific Hospital 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 ABC Taiwan and Pacific Hospital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ABC Taiwan Electronics and Pacific Hospital Supply, you can compare the effects of market volatilities on ABC Taiwan and Pacific Hospital 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 ABC Taiwan with a short position of Pacific Hospital. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABC Taiwan and Pacific Hospital.
Diversification Opportunities for ABC Taiwan and Pacific Hospital
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ABC and Pacific is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding ABC Taiwan Electronics and Pacific Hospital Supply in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Hospital Supply and ABC Taiwan 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 ABC Taiwan Electronics are associated (or correlated) with Pacific Hospital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Hospital Supply has no effect on the direction of ABC Taiwan i.e., ABC Taiwan and Pacific Hospital go up and down completely randomly.
Pair Corralation between ABC Taiwan and Pacific Hospital
Assuming the 90 days trading horizon ABC Taiwan Electronics is expected to under-perform the Pacific Hospital. In addition to that, ABC Taiwan is 1.78 times more volatile than Pacific Hospital Supply. It trades about -0.02 of its total potential returns per unit of risk. Pacific Hospital Supply is currently generating about 0.06 per unit of volatility. If you would invest 7,041 in Pacific Hospital Supply on November 19, 2024 and sell it today you would earn a total of 2,049 from holding Pacific Hospital Supply or generate 29.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ABC Taiwan Electronics vs. Pacific Hospital Supply
Performance |
| Timeline |
| ABC Taiwan Electronics |
| Pacific Hospital Supply |
ABC Taiwan and Pacific Hospital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ABC Taiwan and Pacific Hospital
The main advantage of trading using opposite ABC Taiwan and Pacific Hospital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ABC Taiwan position performs unexpectedly, Pacific Hospital 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 Pacific Hospital will offset losses from the drop in Pacific Hospital's long position.| ABC Taiwan vs. Bright Led Electronics | ABC Taiwan vs. Farglory FTZ Investment | ABC Taiwan vs. Hi Sharp Electronics | ABC Taiwan vs. Rafael Microelectronics |
| Pacific Hospital vs. StShine Optical Co | Pacific Hospital vs. Bioteque | Pacific Hospital vs. United Orthopedic | Pacific Hospital vs. TTY Biopharm 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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