Correlation Between Wholetech System and Pacific Hospital
Can any of the company-specific risk be diversified away by investing in both Wholetech System 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 Wholetech System and Pacific Hospital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wholetech System Hitech and Pacific Hospital Supply, you can compare the effects of market volatilities on Wholetech System 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 Wholetech System with a short position of Pacific Hospital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wholetech System and Pacific Hospital.
Diversification Opportunities for Wholetech System and Pacific Hospital
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Wholetech and Pacific is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Wholetech System Hitech 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 Wholetech System 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 Wholetech System Hitech 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 Wholetech System i.e., Wholetech System and Pacific Hospital go up and down completely randomly.
Pair Corralation between Wholetech System and Pacific Hospital
Assuming the 90 days trading horizon Wholetech System Hitech is expected to generate 3.03 times more return on investment than Pacific Hospital. However, Wholetech System is 3.03 times more volatile than Pacific Hospital Supply. It trades about 0.08 of its potential returns per unit of risk. Pacific Hospital Supply is currently generating about 0.15 per unit of risk. If you would invest 8,810 in Wholetech System Hitech on November 3, 2024 and sell it today you would earn a total of 1,890 from holding Wholetech System Hitech or generate 21.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wholetech System Hitech vs. Pacific Hospital Supply
Performance |
| Timeline |
| Wholetech System Hitech |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
| Pacific Hospital Supply |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Wholetech System and Pacific Hospital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wholetech System and Pacific Hospital
The main advantage of trading using opposite Wholetech System and Pacific Hospital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wholetech System 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.The idea behind Wholetech System Hitech and Pacific Hospital Supply 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.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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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