Correlation Between CA Sales and Life Healthcare
Can any of the company-specific risk be diversified away by investing in both CA Sales 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 CA Sales and Life Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CA Sales Holdings and Life Healthcare, you can compare the effects of market volatilities on CA Sales 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 CA Sales with a short position of Life Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of CA Sales and Life Healthcare.
Diversification Opportunities for CA Sales and Life Healthcare
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CAA and Life is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding CA Sales Holdings and Life Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Life Healthcare and CA Sales 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 CA Sales Holdings 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 CA Sales i.e., CA Sales and Life Healthcare go up and down completely randomly.
Pair Corralation between CA Sales and Life Healthcare
Assuming the 90 days trading horizon CA Sales Holdings is expected to generate 1.79 times more return on investment than Life Healthcare. However, CA Sales is 1.79 times more volatile than Life Healthcare. It trades about 0.03 of its potential returns per unit of risk. Life Healthcare is currently generating about -0.01 per unit of risk. If you would invest 155,000 in CA Sales Holdings on November 3, 2024 and sell it today you would earn a total of 1,500 from holding CA Sales Holdings or generate 0.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CA Sales Holdings vs. Life Healthcare
Performance |
| Timeline |
| CA Sales Holdings |
| Life Healthcare |
CA Sales and Life Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CA Sales and Life Healthcare
The main advantage of trading using opposite CA Sales and Life Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CA Sales 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.| CA Sales vs. HomeChoice Investments | CA Sales vs. Brimstone Investment | CA Sales vs. Ascendis Health | CA Sales vs. MC Mining |
| Life Healthcare vs. Boxer Retail | Life Healthcare vs. Capitec Bank Holdings | Life Healthcare vs. Frontier Transport Holdings | Life Healthcare vs. Mantengu 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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