Correlation Between MedFirst Healthcare and Shin Hai
Can any of the company-specific risk be diversified away by investing in both MedFirst Healthcare and Shin Hai 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 Shin Hai 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 Shin Hai Gas, you can compare the effects of market volatilities on MedFirst Healthcare and Shin Hai 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 Shin Hai. Check out your portfolio center. Please also check ongoing floating volatility patterns of MedFirst Healthcare and Shin Hai.
Diversification Opportunities for MedFirst Healthcare and Shin Hai
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MedFirst and Shin is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding MedFirst Healthcare Services and Shin Hai Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shin Hai Gas 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 Shin Hai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shin Hai Gas has no effect on the direction of MedFirst Healthcare i.e., MedFirst Healthcare and Shin Hai go up and down completely randomly.
Pair Corralation between MedFirst Healthcare and Shin Hai
Assuming the 90 days trading horizon MedFirst Healthcare Services is expected to under-perform the Shin Hai. In addition to that, MedFirst Healthcare is 1.35 times more volatile than Shin Hai Gas. It trades about -0.07 of its total potential returns per unit of risk. Shin Hai Gas is currently generating about -0.01 per unit of volatility. If you would invest 5,490 in Shin Hai Gas on September 12, 2024 and sell it today you would lose (260.00) from holding Shin Hai Gas or give up 4.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MedFirst Healthcare Services vs. Shin Hai Gas
Performance |
| Timeline |
| MedFirst Healthcare |
| Shin Hai Gas |
MedFirst Healthcare and Shin Hai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MedFirst Healthcare and Shin Hai
The main advantage of trading using opposite MedFirst Healthcare and Shin Hai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MedFirst Healthcare position performs unexpectedly, Shin Hai 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 Shin Hai will offset losses from the drop in Shin Hai's long position.The idea behind MedFirst Healthcare Services and Shin Hai Gas 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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