Correlation Between Pacific Hospital and Standard Foods
Can any of the company-specific risk be diversified away by investing in both Pacific Hospital and Standard Foods 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 Pacific Hospital and Standard Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pacific Hospital Supply and Standard Foods Corp, you can compare the effects of market volatilities on Pacific Hospital and Standard Foods 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 Pacific Hospital with a short position of Standard Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacific Hospital and Standard Foods.
Diversification Opportunities for Pacific Hospital and Standard Foods
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Pacific and Standard is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Hospital Supply and Standard Foods Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Foods Corp and Pacific Hospital 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 Pacific Hospital Supply are associated (or correlated) with Standard Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standard Foods Corp has no effect on the direction of Pacific Hospital i.e., Pacific Hospital and Standard Foods go up and down completely randomly.
Pair Corralation between Pacific Hospital and Standard Foods
Assuming the 90 days trading horizon Pacific Hospital Supply is expected to generate 0.76 times more return on investment than Standard Foods. However, Pacific Hospital Supply is 1.32 times less risky than Standard Foods. It trades about 0.19 of its potential returns per unit of risk. Standard Foods Corp is currently generating about -0.05 per unit of risk. 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pacific Hospital Supply vs. Standard Foods Corp
Performance |
| Timeline |
| Pacific Hospital Supply |
| Standard Foods Corp |
Pacific Hospital and Standard Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacific Hospital and Standard Foods
The main advantage of trading using opposite Pacific Hospital and Standard Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacific Hospital position performs unexpectedly, Standard Foods 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 Standard Foods will offset losses from the drop in Standard Foods' long position.| Pacific Hospital vs. StShine Optical Co | Pacific Hospital vs. Bioteque | Pacific Hospital vs. United Orthopedic | Pacific Hospital vs. TTY Biopharm Co |
| Standard Foods vs. Uni President Enterprises Corp | Standard Foods vs. TTET Union Corp | Standard Foods vs. President Chain Store | Standard Foods vs. Charoen Pokphand Enterprise |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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