Correlation Between SHIP HEALTHCARE and APPLIED MATERIALS
Can any of the company-specific risk be diversified away by investing in both SHIP HEALTHCARE and APPLIED MATERIALS 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 SHIP HEALTHCARE and APPLIED MATERIALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SHIP HEALTHCARE HLDGINC and APPLIED MATERIALS, you can compare the effects of market volatilities on SHIP HEALTHCARE and APPLIED MATERIALS 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 SHIP HEALTHCARE with a short position of APPLIED MATERIALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of SHIP HEALTHCARE and APPLIED MATERIALS.
Diversification Opportunities for SHIP HEALTHCARE and APPLIED MATERIALS
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SHIP and APPLIED is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding SHIP HEALTHCARE HLDGINC and APPLIED MATERIALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APPLIED MATERIALS and SHIP 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 SHIP HEALTHCARE HLDGINC are associated (or correlated) with APPLIED MATERIALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APPLIED MATERIALS has no effect on the direction of SHIP HEALTHCARE i.e., SHIP HEALTHCARE and APPLIED MATERIALS go up and down completely randomly.
Pair Corralation between SHIP HEALTHCARE and APPLIED MATERIALS
Assuming the 90 days horizon SHIP HEALTHCARE HLDGINC is expected to generate 0.72 times more return on investment than APPLIED MATERIALS. However, SHIP HEALTHCARE HLDGINC is 1.39 times less risky than APPLIED MATERIALS. It trades about -0.04 of its potential returns per unit of risk. APPLIED MATERIALS is currently generating about -0.09 per unit of risk. If you would invest 1,360 in SHIP HEALTHCARE HLDGINC on August 29, 2024 and sell it today you would lose (30.00) from holding SHIP HEALTHCARE HLDGINC or give up 2.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SHIP HEALTHCARE HLDGINC vs. APPLIED MATERIALS
Performance |
| Timeline |
| SHIP HEALTHCARE HLDGINC |
| APPLIED MATERIALS |
SHIP HEALTHCARE and APPLIED MATERIALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SHIP HEALTHCARE and APPLIED MATERIALS
The main advantage of trading using opposite SHIP HEALTHCARE and APPLIED MATERIALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SHIP HEALTHCARE position performs unexpectedly, APPLIED MATERIALS 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 APPLIED MATERIALS will offset losses from the drop in APPLIED MATERIALS's long position.| SHIP HEALTHCARE vs. Evolution Mining Limited | SHIP HEALTHCARE vs. Ubisoft Entertainment SA | SHIP HEALTHCARE vs. RCS MediaGroup SpA | SHIP HEALTHCARE vs. Beijing Media |
| APPLIED MATERIALS vs. Apple Inc | APPLIED MATERIALS vs. Apple Inc | APPLIED MATERIALS vs. Microsoft | APPLIED MATERIALS vs. Microsoft |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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