Correlation Between CHC Healthcare and Genovate Biotechnology
Can any of the company-specific risk be diversified away by investing in both CHC Healthcare and Genovate Biotechnology 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 Genovate Biotechnology 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 Genovate Biotechnology Co, you can compare the effects of market volatilities on CHC Healthcare and Genovate Biotechnology 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 Genovate Biotechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHC Healthcare and Genovate Biotechnology.
Diversification Opportunities for CHC Healthcare and Genovate Biotechnology
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CHC and Genovate is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding CHC Healthcare Group and Genovate Biotechnology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genovate Biotechnology 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 Genovate Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genovate Biotechnology has no effect on the direction of CHC Healthcare i.e., CHC Healthcare and Genovate Biotechnology go up and down completely randomly.
Pair Corralation between CHC Healthcare and Genovate Biotechnology
Assuming the 90 days trading horizon CHC Healthcare Group is expected to generate 3.62 times more return on investment than Genovate Biotechnology. However, CHC Healthcare is 3.62 times more volatile than Genovate Biotechnology Co. It trades about 0.58 of its potential returns per unit of risk. Genovate Biotechnology Co is currently generating about 0.27 per unit of risk. If you would invest 4,430 in CHC Healthcare Group on November 28, 2024 and sell it today you would earn a total of 1,490 from holding CHC Healthcare Group or generate 33.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHC Healthcare Group vs. Genovate Biotechnology Co
Performance |
| Timeline |
| CHC Healthcare Group |
| Genovate Biotechnology |
CHC Healthcare and Genovate Biotechnology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHC Healthcare and Genovate Biotechnology
The main advantage of trading using opposite CHC Healthcare and Genovate Biotechnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHC Healthcare position performs unexpectedly, Genovate Biotechnology 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 Genovate Biotechnology will offset losses from the drop in Genovate Biotechnology's long position.| CHC Healthcare vs. Phytohealth Corp | CHC Healthcare vs. GenMont Biotech | CHC Healthcare vs. Hung Sheng Construction | CHC Healthcare vs. De Licacy Industrial |
| Genovate Biotechnology vs. Johnson Health Tech | Genovate Biotechnology vs. Hunya Foods Co | Genovate Biotechnology vs. Sporton International | Genovate Biotechnology vs. Mechema Chemicals Int |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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