Correlation Between CHC Healthcare and NEXCOM International
Can any of the company-specific risk be diversified away by investing in both CHC Healthcare and NEXCOM International 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 NEXCOM International 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 NEXCOM International Co, you can compare the effects of market volatilities on CHC Healthcare and NEXCOM International 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 NEXCOM International. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHC Healthcare and NEXCOM International.
Diversification Opportunities for CHC Healthcare and NEXCOM International
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CHC and NEXCOM is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding CHC Healthcare Group and NEXCOM International Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEXCOM International 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 NEXCOM International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEXCOM International has no effect on the direction of CHC Healthcare i.e., CHC Healthcare and NEXCOM International go up and down completely randomly.
Pair Corralation between CHC Healthcare and NEXCOM International
Assuming the 90 days trading horizon CHC Healthcare Group is expected to under-perform the NEXCOM International. But the stock apears to be less risky and, when comparing its historical volatility, CHC Healthcare Group is 1.4 times less risky than NEXCOM International. The stock trades about -0.08 of its potential returns per unit of risk. The NEXCOM International Co is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 5,580 in NEXCOM International Co on September 3, 2024 and sell it today you would lose (430.00) from holding NEXCOM International Co or give up 7.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHC Healthcare Group vs. NEXCOM International Co
Performance |
| Timeline |
| CHC Healthcare Group |
| NEXCOM International |
CHC Healthcare and NEXCOM International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHC Healthcare and NEXCOM International
The main advantage of trading using opposite CHC Healthcare and NEXCOM International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHC Healthcare position performs unexpectedly, NEXCOM International 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 NEXCOM International will offset losses from the drop in NEXCOM International'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 |
| NEXCOM International vs. Sesoda Corp | NEXCOM International vs. Oceanic Beverages Co | NEXCOM International vs. U Ming Marine Transport | NEXCOM International vs. CHC Healthcare Group |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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