Correlation Between MedFirst Healthcare and China Airlines
Can any of the company-specific risk be diversified away by investing in both MedFirst Healthcare and China Airlines 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 MedFirst Healthcare and China Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MedFirst Healthcare Services and China Airlines, you can compare the effects of market volatilities on MedFirst Healthcare and China Airlines 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 MedFirst Healthcare with a short position of China Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of MedFirst Healthcare and China Airlines.
Diversification Opportunities for MedFirst Healthcare and China Airlines
-0.9 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between MedFirst and China is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding MedFirst Healthcare Services and China Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Airlines and MedFirst 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 MedFirst Healthcare Services are associated (or correlated) with China Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Airlines has no effect on the direction of MedFirst Healthcare i.e., MedFirst Healthcare and China Airlines go up and down completely randomly.
Pair Corralation between MedFirst Healthcare and China Airlines
Assuming the 90 days trading horizon MedFirst Healthcare Services is expected to under-perform the China Airlines. But the stock apears to be less risky and, when comparing its historical volatility, MedFirst Healthcare Services is 1.76 times less risky than China Airlines. The stock trades about -0.1 of its potential returns per unit of risk. The China Airlines is currently generating about 0.45 of returns per unit of risk over similar time horizon. If you would invest 2,250 in China Airlines on September 2, 2024 and sell it today you would earn a total of 240.00 from holding China Airlines or generate 10.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MedFirst Healthcare Services vs. China Airlines
Performance |
| Timeline |
| MedFirst Healthcare |
| China Airlines |
MedFirst Healthcare and China Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MedFirst Healthcare and China Airlines
The main advantage of trading using opposite MedFirst Healthcare and China Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MedFirst Healthcare position performs unexpectedly, China Airlines 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 China Airlines will offset losses from the drop in China Airlines' long position.| MedFirst Healthcare vs. LandMark Optoelectronics | MedFirst Healthcare vs. Compal Electronics | MedFirst Healthcare vs. Excellence Optoelectronic | MedFirst Healthcare vs. Leader Electronics |
| China Airlines vs. Eva Airways Corp | China Airlines vs. Evergreen Marine Corp | China Airlines vs. Yang Ming Marine | China Airlines vs. China Steel Corp |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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