Correlation Between Advtech and Life Healthcare
Can any of the company-specific risk be diversified away by investing in both Advtech and Life 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 Advtech and Life Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advtech and Life Healthcare, you can compare the effects of market volatilities on Advtech and Life 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 Advtech with a short position of Life Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advtech and Life Healthcare.
Diversification Opportunities for Advtech and Life Healthcare
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Advtech and Life is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Advtech and Life Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Life Healthcare and Advtech 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 Advtech are associated (or correlated) with Life Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Life Healthcare has no effect on the direction of Advtech i.e., Advtech and Life Healthcare go up and down completely randomly.
Pair Corralation between Advtech and Life Healthcare
Assuming the 90 days trading horizon Advtech is expected to generate 83.05 times less return on investment than Life Healthcare. But when comparing it to its historical volatility, Advtech is 1.42 times less risky than Life Healthcare. It trades about 0.0 of its potential returns per unit of risk. Life Healthcare is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 142,900 in Life Healthcare on August 31, 2024 and sell it today you would earn a total of 31,300 from holding Life Healthcare or generate 21.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advtech vs. Life Healthcare
Performance |
| Timeline |
| Advtech |
| Life Healthcare |
Advtech and Life Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advtech and Life Healthcare
The main advantage of trading using opposite Advtech and Life Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advtech position performs unexpectedly, Life 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 Life Healthcare will offset losses from the drop in Life Healthcare's long position.| Advtech vs. Zeder Investments | Advtech vs. Deneb Investments | Advtech vs. African Media Entertainment | Advtech vs. HomeChoice Investments |
| Life Healthcare vs. Kap Industrial Holdings | Life Healthcare vs. Frontier Transport Holdings | Life Healthcare vs. Master Drilling Group | Life Healthcare vs. Harmony Gold Mining |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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