Correlation Between Pacific Hospital and Brighten Optix
Can any of the company-specific risk be diversified away by investing in both Pacific Hospital and Brighten Optix 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 Brighten Optix 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 Brighten Optix, you can compare the effects of market volatilities on Pacific Hospital and Brighten Optix 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 Brighten Optix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacific Hospital and Brighten Optix.
Diversification Opportunities for Pacific Hospital and Brighten Optix
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Pacific and Brighten is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Hospital Supply and Brighten Optix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brighten Optix 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 Brighten Optix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brighten Optix has no effect on the direction of Pacific Hospital i.e., Pacific Hospital and Brighten Optix go up and down completely randomly.
Pair Corralation between Pacific Hospital and Brighten Optix
Assuming the 90 days trading horizon Pacific Hospital Supply is expected to under-perform the Brighten Optix. But the stock apears to be less risky and, when comparing its historical volatility, Pacific Hospital Supply is 3.54 times less risky than Brighten Optix. The stock trades about -0.29 of its potential returns per unit of risk. The Brighten Optix is currently generating about 0.46 of returns per unit of risk over similar time horizon. If you would invest 12,650 in Brighten Optix on November 27, 2024 and sell it today you would earn a total of 1,950 from holding Brighten Optix or generate 15.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pacific Hospital Supply vs. Brighten Optix
Performance |
| Timeline |
| Pacific Hospital Supply |
| Brighten Optix |
Pacific Hospital and Brighten Optix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacific Hospital and Brighten Optix
The main advantage of trading using opposite Pacific Hospital and Brighten Optix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacific Hospital position performs unexpectedly, Brighten Optix 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 Brighten Optix will offset losses from the drop in Brighten Optix's long position.| Pacific Hospital vs. Universal Vision Biotechnology | Pacific Hospital vs. Excelsior Medical Co | Pacific Hospital vs. Delta Asia International | Pacific Hospital vs. Hi Clearance |
| Brighten Optix vs. Lelon Electronics Corp | Brighten Optix vs. Yao Sheng Electronic | Brighten Optix vs. Mercuries Life Insurance | Brighten Optix vs. Hi Sharp Electronics |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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