Correlation Between Pacific Hospital and ANJI Technology
Can any of the company-specific risk be diversified away by investing in both Pacific Hospital and ANJI Technology 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 ANJI Technology 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 ANJI Technology Co, you can compare the effects of market volatilities on Pacific Hospital and ANJI Technology 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 ANJI Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacific Hospital and ANJI Technology.
Diversification Opportunities for Pacific Hospital and ANJI Technology
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Pacific and ANJI is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Hospital Supply and ANJI Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ANJI Technology 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 ANJI Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ANJI Technology has no effect on the direction of Pacific Hospital i.e., Pacific Hospital and ANJI Technology go up and down completely randomly.
Pair Corralation between Pacific Hospital and ANJI Technology
Assuming the 90 days trading horizon Pacific Hospital is expected to generate 1.6 times less return on investment than ANJI Technology. But when comparing it to its historical volatility, Pacific Hospital Supply is 3.43 times less risky than ANJI Technology. It trades about 0.15 of its potential returns per unit of risk. ANJI Technology Co is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 3,315 in ANJI Technology Co on November 3, 2024 and sell it today you would earn a total of 655.00 from holding ANJI Technology Co or generate 19.76% 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. ANJI Technology Co
Performance |
| Timeline |
| Pacific Hospital Supply |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
| ANJI Technology |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Pacific Hospital and ANJI Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacific Hospital and ANJI Technology
The main advantage of trading using opposite Pacific Hospital and ANJI Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacific Hospital position performs unexpectedly, ANJI Technology 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 ANJI Technology will offset losses from the drop in ANJI Technology's long position.The idea behind Pacific Hospital Supply and ANJI Technology Co 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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