Correlation Between Acadia Healthcare and HEMISPHERE EGY
Can any of the company-specific risk be diversified away by investing in both Acadia Healthcare and HEMISPHERE EGY 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 Acadia Healthcare and HEMISPHERE EGY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Acadia Healthcare and HEMISPHERE EGY, you can compare the effects of market volatilities on Acadia Healthcare and HEMISPHERE EGY 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 Acadia Healthcare with a short position of HEMISPHERE EGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acadia Healthcare and HEMISPHERE EGY.
Diversification Opportunities for Acadia Healthcare and HEMISPHERE EGY
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Acadia and HEMISPHERE is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Acadia Healthcare and HEMISPHERE EGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEMISPHERE EGY and Acadia 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 Acadia Healthcare are associated (or correlated) with HEMISPHERE EGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEMISPHERE EGY has no effect on the direction of Acadia Healthcare i.e., Acadia Healthcare and HEMISPHERE EGY go up and down completely randomly.
Pair Corralation between Acadia Healthcare and HEMISPHERE EGY
Assuming the 90 days horizon Acadia Healthcare is expected to under-perform the HEMISPHERE EGY. In addition to that, Acadia Healthcare is 1.98 times more volatile than HEMISPHERE EGY. It trades about -0.05 of its total potential returns per unit of risk. HEMISPHERE EGY is currently generating about 0.13 per unit of volatility. If you would invest 76.00 in HEMISPHERE EGY on October 27, 2024 and sell it today you would earn a total of 47.00 from holding HEMISPHERE EGY or generate 61.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Acadia Healthcare vs. HEMISPHERE EGY
Performance |
| Timeline |
| Acadia Healthcare |
| HEMISPHERE EGY |
Acadia Healthcare and HEMISPHERE EGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Acadia Healthcare and HEMISPHERE EGY
The main advantage of trading using opposite Acadia Healthcare and HEMISPHERE EGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acadia Healthcare position performs unexpectedly, HEMISPHERE EGY 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 HEMISPHERE EGY will offset losses from the drop in HEMISPHERE EGY's long position.| Acadia Healthcare vs. CHRYSALIS INVESTMENTS LTD | Acadia Healthcare vs. Chuangs China Investments | Acadia Healthcare vs. SLR Investment Corp | Acadia Healthcare vs. ECHO INVESTMENT ZY |
| HEMISPHERE EGY vs. Southwest Airlines Co | HEMISPHERE EGY vs. EAGLE MATERIALS | HEMISPHERE EGY vs. Applied Materials | HEMISPHERE EGY vs. Compagnie Plastic Omnium |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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