Correlation Between Cardinal Health and China Medicine
Can any of the company-specific risk be diversified away by investing in both Cardinal Health and China Medicine 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 Cardinal Health and China Medicine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardinal Health and China Medicine, you can compare the effects of market volatilities on Cardinal Health and China Medicine 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 Cardinal Health with a short position of China Medicine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Health and China Medicine.
Diversification Opportunities for Cardinal Health and China Medicine
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cardinal and China is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and China Medicine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Medicine and Cardinal Health 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 Cardinal Health are associated (or correlated) with China Medicine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Medicine has no effect on the direction of Cardinal Health i.e., Cardinal Health and China Medicine go up and down completely randomly.
Pair Corralation between Cardinal Health and China Medicine
If you would invest 10,852 in Cardinal Health on September 1, 2024 and sell it today you would earn a total of 1,372 from holding Cardinal Health or generate 12.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Cardinal Health vs. China Medicine
Performance |
| Timeline |
| Cardinal Health |
| China Medicine |
Cardinal Health and China Medicine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardinal Health and China Medicine
The main advantage of trading using opposite Cardinal Health and China Medicine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Health position performs unexpectedly, China Medicine 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 China Medicine will offset losses from the drop in China Medicine's long position.| Cardinal Health vs. Humana Inc | Cardinal Health vs. Cigna Corp | Cardinal Health vs. Elevance Health | Cardinal Health vs. Centene Corp |
| China Medicine vs. Cardinal Health | China Medicine vs. Henry Schein | China Medicine vs. Owens Minor | China Medicine vs. Patterson Companies |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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