Correlation Between MedFirst Healthcare and Asia Metal
Can any of the company-specific risk be diversified away by investing in both MedFirst Healthcare and Asia Metal 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 Asia Metal 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 Asia Metal Industries, you can compare the effects of market volatilities on MedFirst Healthcare and Asia Metal 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 Asia Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of MedFirst Healthcare and Asia Metal.
Diversification Opportunities for MedFirst Healthcare and Asia Metal
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MedFirst and Asia is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding MedFirst Healthcare Services and Asia Metal Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Metal Industries 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 Asia Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Metal Industries has no effect on the direction of MedFirst Healthcare i.e., MedFirst Healthcare and Asia Metal go up and down completely randomly.
Pair Corralation between MedFirst Healthcare and Asia Metal
Assuming the 90 days trading horizon MedFirst Healthcare Services is expected to under-perform the Asia Metal. But the stock apears to be less risky and, when comparing its historical volatility, MedFirst Healthcare Services is 2.43 times less risky than Asia Metal. The stock trades about -0.08 of its potential returns per unit of risk. The Asia Metal Industries is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 5,750 in Asia Metal Industries on September 3, 2024 and sell it today you would earn a total of 3,050 from holding Asia Metal Industries or generate 53.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MedFirst Healthcare Services vs. Asia Metal Industries
Performance |
| Timeline |
| MedFirst Healthcare |
| Asia Metal Industries |
MedFirst Healthcare and Asia Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MedFirst Healthcare and Asia Metal
The main advantage of trading using opposite MedFirst Healthcare and Asia Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MedFirst Healthcare position performs unexpectedly, Asia Metal 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 Asia Metal will offset losses from the drop in Asia Metal's long position.The idea behind MedFirst Healthcare Services and Asia Metal Industries 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.
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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