Correlation Between C Tech and Pacific Hospital

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Can any of the company-specific risk be diversified away by investing in both C Tech 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 C Tech and Pacific Hospital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between C Tech United and Pacific Hospital Supply, you can compare the effects of market volatilities on C Tech 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 C Tech with a short position of Pacific Hospital. Check out your portfolio center. Please also check ongoing floating volatility patterns of C Tech and Pacific Hospital.

Diversification Opportunities for C Tech and Pacific Hospital

0.62
  Correlation Coefficient

Poor diversification

The 3 months correlation between 3625 and Pacific is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding C Tech United 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 C Tech 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 C Tech United 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 C Tech i.e., C Tech and Pacific Hospital go up and down completely randomly.

Pair Corralation between C Tech and Pacific Hospital

Assuming the 90 days trading horizon C Tech United is expected to generate 4.91 times more return on investment than Pacific Hospital. However, C Tech is 4.91 times more volatile than Pacific Hospital Supply. It trades about 0.11 of its potential returns per unit of risk. Pacific Hospital Supply is currently generating about 0.01 per unit of risk. If you would invest  1,630  in C Tech United on October 24, 2024 and sell it today you would earn a total of  175.00  from holding C Tech United or generate 10.74% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

C Tech United  vs.  Pacific Hospital Supply

 Performance 
       Timeline  
C Tech United 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in C Tech United are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, C Tech showed solid returns over the last few months and may actually be approaching a breakup point.
Pacific Hospital Supply 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Pacific Hospital Supply are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Pacific Hospital is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

C Tech and Pacific Hospital Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with C Tech and Pacific Hospital

The main advantage of trading using opposite C Tech and Pacific Hospital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if C Tech 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 C Tech United 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

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