Correlation Between Cowealth Medical and Contec Medical
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By analyzing existing cross correlation between Cowealth Medical China and Contec Medical Systems, you can compare the effects of market volatilities on Cowealth Medical and Contec Medical 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 Cowealth Medical with a short position of Contec Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cowealth Medical and Contec Medical.
Diversification Opportunities for Cowealth Medical and Contec Medical
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cowealth and Contec is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Cowealth Medical China and Contec Medical Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Contec Medical Systems and Cowealth Medical 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 Cowealth Medical China are associated (or correlated) with Contec Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Contec Medical Systems has no effect on the direction of Cowealth Medical i.e., Cowealth Medical and Contec Medical go up and down completely randomly.
Pair Corralation between Cowealth Medical and Contec Medical
Assuming the 90 days trading horizon Cowealth Medical China is expected to under-perform the Contec Medical. In addition to that, Cowealth Medical is 1.56 times more volatile than Contec Medical Systems. It trades about -0.05 of its total potential returns per unit of risk. Contec Medical Systems is currently generating about -0.04 per unit of volatility. If you would invest 1,597 in Contec Medical Systems on September 1, 2024 and sell it today you would lose (40.00) from holding Contec Medical Systems or give up 2.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cowealth Medical China vs. Contec Medical Systems
Performance |
| Timeline |
| Cowealth Medical China |
| Contec Medical Systems |
Cowealth Medical and Contec Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cowealth Medical and Contec Medical
The main advantage of trading using opposite Cowealth Medical and Contec Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cowealth Medical position performs unexpectedly, Contec Medical 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 Contec Medical will offset losses from the drop in Contec Medical's long position.The idea behind Cowealth Medical China and Contec Medical Systems 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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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