Correlation Between WPG Holdings and Pacific Hospital
Can any of the company-specific risk be diversified away by investing in both WPG Holdings 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 WPG Holdings and Pacific Hospital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WPG Holdings and Pacific Hospital Supply, you can compare the effects of market volatilities on WPG Holdings 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 WPG Holdings with a short position of Pacific Hospital. Check out your portfolio center. Please also check ongoing floating volatility patterns of WPG Holdings and Pacific Hospital.
Diversification Opportunities for WPG Holdings and Pacific Hospital
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between WPG and Pacific is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding WPG Holdings 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 WPG Holdings 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 WPG Holdings 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 WPG Holdings i.e., WPG Holdings and Pacific Hospital go up and down completely randomly.
Pair Corralation between WPG Holdings and Pacific Hospital
Assuming the 90 days trading horizon WPG Holdings is expected to generate 1.75 times less return on investment than Pacific Hospital. But when comparing it to its historical volatility, WPG Holdings is 3.09 times less risky than Pacific Hospital. It trades about 0.33 of its potential returns per unit of risk. Pacific Hospital Supply is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 8,780 in Pacific Hospital Supply on September 2, 2024 and sell it today you would earn a total of 150.00 from holding Pacific Hospital Supply or generate 1.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WPG Holdings vs. Pacific Hospital Supply
Performance |
| Timeline |
| WPG Holdings |
| Pacific Hospital Supply |
WPG Holdings and Pacific Hospital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WPG Holdings and Pacific Hospital
The main advantage of trading using opposite WPG Holdings and Pacific Hospital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WPG Holdings 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.| WPG Holdings vs. Yieh United Steel | WPG Holdings vs. Tang Eng Iron | WPG Holdings vs. Hi Lai Foods Co | WPG Holdings vs. China Steel Corp |
| 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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