Correlation Between Pacific Hospital and Johnson Health
Can any of the company-specific risk be diversified away by investing in both Pacific Hospital and Johnson Health 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 Johnson Health 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 Johnson Health Tech, you can compare the effects of market volatilities on Pacific Hospital and Johnson Health 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 Johnson Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacific Hospital and Johnson Health.
Diversification Opportunities for Pacific Hospital and Johnson Health
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Pacific and Johnson is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Hospital Supply and Johnson Health Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Health Tech 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 Johnson Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johnson Health Tech has no effect on the direction of Pacific Hospital i.e., Pacific Hospital and Johnson Health go up and down completely randomly.
Pair Corralation between Pacific Hospital and Johnson Health
Assuming the 90 days trading horizon Pacific Hospital Supply is expected to generate 0.11 times more return on investment than Johnson Health. However, Pacific Hospital Supply is 9.22 times less risky than Johnson Health. It trades about 0.14 of its potential returns per unit of risk. Johnson Health Tech is currently generating about -0.1 per unit of risk. If you would invest 8,820 in Pacific Hospital Supply on September 3, 2024 and sell it today you would earn a total of 110.00 from holding Pacific Hospital Supply or generate 1.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pacific Hospital Supply vs. Johnson Health Tech
Performance |
| Timeline |
| Pacific Hospital Supply |
| Johnson Health Tech |
Pacific Hospital and Johnson Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacific Hospital and Johnson Health
The main advantage of trading using opposite Pacific Hospital and Johnson Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacific Hospital position performs unexpectedly, Johnson Health 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 Johnson Health will offset losses from the drop in Johnson Health's long position.| Pacific Hospital vs. StShine Optical Co | Pacific Hospital vs. Bioteque | Pacific Hospital vs. TTY Biopharm Co | Pacific Hospital vs. Apex Biotechnology Corp |
| Johnson Health vs. Tainan Spinning Co | Johnson Health vs. Chia Her Industrial | Johnson Health vs. WiseChip Semiconductor | Johnson Health vs. Novatek Microelectronics Corp |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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