Correlation Between Excelsior Medical and CHC Healthcare
Can any of the company-specific risk be diversified away by investing in both Excelsior Medical and CHC Healthcare 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 Excelsior Medical and CHC Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Excelsior Medical Co and CHC Healthcare Group, you can compare the effects of market volatilities on Excelsior Medical and CHC Healthcare 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 Excelsior Medical with a short position of CHC Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Excelsior Medical and CHC Healthcare.
Diversification Opportunities for Excelsior Medical and CHC Healthcare
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Excelsior and CHC is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Excelsior Medical Co and CHC Healthcare Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHC Healthcare Group and Excelsior Medical 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 Excelsior Medical Co are associated (or correlated) with CHC Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHC Healthcare Group has no effect on the direction of Excelsior Medical i.e., Excelsior Medical and CHC Healthcare go up and down completely randomly.
Pair Corralation between Excelsior Medical and CHC Healthcare
Assuming the 90 days trading horizon Excelsior Medical Co is expected to generate 0.18 times more return on investment than CHC Healthcare. However, Excelsior Medical Co is 5.55 times less risky than CHC Healthcare. It trades about -0.05 of its potential returns per unit of risk. CHC Healthcare Group is currently generating about -0.1 per unit of risk. If you would invest 8,770 in Excelsior Medical Co on August 28, 2024 and sell it today you would lose (30.00) from holding Excelsior Medical Co or give up 0.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Excelsior Medical Co vs. CHC Healthcare Group
Performance |
| Timeline |
| Excelsior Medical |
| CHC Healthcare Group |
Excelsior Medical and CHC Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Excelsior Medical and CHC Healthcare
The main advantage of trading using opposite Excelsior Medical and CHC Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Excelsior Medical position performs unexpectedly, CHC Healthcare 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 CHC Healthcare will offset losses from the drop in CHC Healthcare's long position.The idea behind Excelsior Medical Co and CHC Healthcare Group 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.| CHC Healthcare vs. Phytohealth Corp | CHC Healthcare vs. GenMont Biotech | CHC Healthcare vs. Hung Sheng Construction | CHC Healthcare vs. De Licacy Industrial |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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