Correlation Between CHC Healthcare and Phytohealth Corp
Can any of the company-specific risk be diversified away by investing in both CHC Healthcare and Phytohealth Corp 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 CHC Healthcare and Phytohealth Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHC Healthcare Group and Phytohealth Corp, you can compare the effects of market volatilities on CHC Healthcare and Phytohealth Corp 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 CHC Healthcare with a short position of Phytohealth Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHC Healthcare and Phytohealth Corp.
Diversification Opportunities for CHC Healthcare and Phytohealth Corp
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CHC and Phytohealth is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding CHC Healthcare Group and Phytohealth Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phytohealth Corp and CHC Healthcare 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 CHC Healthcare Group are associated (or correlated) with Phytohealth Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phytohealth Corp has no effect on the direction of CHC Healthcare i.e., CHC Healthcare and Phytohealth Corp go up and down completely randomly.
Pair Corralation between CHC Healthcare and Phytohealth Corp
Assuming the 90 days trading horizon CHC Healthcare Group is expected to generate 1.71 times more return on investment than Phytohealth Corp. However, CHC Healthcare is 1.71 times more volatile than Phytohealth Corp. It trades about 0.29 of its potential returns per unit of risk. Phytohealth Corp is currently generating about -0.33 per unit of risk. If you would invest 4,180 in CHC Healthcare Group on November 4, 2024 and sell it today you would earn a total of 265.00 from holding CHC Healthcare Group or generate 6.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHC Healthcare Group vs. Phytohealth Corp
Performance |
| Timeline |
| CHC Healthcare Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
| Phytohealth Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
CHC Healthcare and Phytohealth Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHC Healthcare and Phytohealth Corp
The main advantage of trading using opposite CHC Healthcare and Phytohealth Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHC Healthcare position performs unexpectedly, Phytohealth Corp 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 Phytohealth Corp will offset losses from the drop in Phytohealth Corp's long position.The idea behind CHC Healthcare Group and Phytohealth Corp 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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