Correlation Between Galaxy Software and CHC Healthcare
Can any of the company-specific risk be diversified away by investing in both Galaxy Software and CHC Healthcare 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 Galaxy Software and CHC Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Galaxy Software Services and CHC Healthcare Group, you can compare the effects of market volatilities on Galaxy Software and CHC Healthcare 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 Galaxy Software with a short position of CHC Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Galaxy Software and CHC Healthcare.
Diversification Opportunities for Galaxy Software and CHC Healthcare
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Galaxy and CHC is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Galaxy Software Services and CHC Healthcare Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHC Healthcare Group and Galaxy Software 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 Galaxy Software Services are associated (or correlated) with CHC Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHC Healthcare Group has no effect on the direction of Galaxy Software i.e., Galaxy Software and CHC Healthcare go up and down completely randomly.
Pair Corralation between Galaxy Software and CHC Healthcare
Assuming the 90 days trading horizon Galaxy Software Services is expected to generate 22.4 times more return on investment than CHC Healthcare. However, Galaxy Software is 22.4 times more volatile than CHC Healthcare Group. It trades about 0.05 of its potential returns per unit of risk. CHC Healthcare Group is currently generating about -0.01 per unit of risk. If you would invest 5,671 in Galaxy Software Services on October 28, 2024 and sell it today you would earn a total of 6,879 from holding Galaxy Software Services or generate 121.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Galaxy Software Services vs. CHC Healthcare Group
Performance |
| Timeline |
| Galaxy Software Services |
| CHC Healthcare Group |
Galaxy Software and CHC Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Galaxy Software and CHC Healthcare
The main advantage of trading using opposite Galaxy Software and CHC Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Galaxy Software position performs unexpectedly, CHC Healthcare 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 CHC Healthcare will offset losses from the drop in CHC Healthcare's long position.| Galaxy Software vs. Union Insurance Co | Galaxy Software vs. U Tech Media Corp | Galaxy Software vs. Cayenne Entertainment Technology | Galaxy Software vs. U Media Communications |
| CHC Healthcare vs. GenMont Biotech | CHC Healthcare vs. Sinphar Pharmaceutical Co | CHC Healthcare vs. Abnova Taiwan Corp | CHC Healthcare vs. Wellell |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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