Correlation Between Capitol Health and Austco Healthcare
Can any of the company-specific risk be diversified away by investing in both Capitol Health and Austco 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 Capitol Health and Austco Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capitol Health and Austco Healthcare, you can compare the effects of market volatilities on Capitol Health and Austco 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 Capitol Health with a short position of Austco Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capitol Health and Austco Healthcare.
Diversification Opportunities for Capitol Health and Austco Healthcare
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Capitol and Austco is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Capitol Health and Austco Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Austco Healthcare and Capitol 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 Capitol Health are associated (or correlated) with Austco Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Austco Healthcare has no effect on the direction of Capitol Health i.e., Capitol Health and Austco Healthcare go up and down completely randomly.
Pair Corralation between Capitol Health and Austco Healthcare
Assuming the 90 days trading horizon Capitol Health is expected to under-perform the Austco Healthcare. In addition to that, Capitol Health is 1.17 times more volatile than Austco Healthcare. It trades about -0.03 of its total potential returns per unit of risk. Austco Healthcare is currently generating about 0.09 per unit of volatility. If you would invest 24.00 in Austco Healthcare on August 28, 2024 and sell it today you would earn a total of 1.00 from holding Austco Healthcare or generate 4.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capitol Health vs. Austco Healthcare
Performance |
| Timeline |
| Capitol Health |
| Austco Healthcare |
Capitol Health and Austco Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capitol Health and Austco Healthcare
The main advantage of trading using opposite Capitol Health and Austco Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capitol Health position performs unexpectedly, Austco 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 Austco Healthcare will offset losses from the drop in Austco Healthcare's long position.| Capitol Health vs. Inventis | Capitol Health vs. PM Capital Global | Capitol Health vs. Macquarie Group Ltd | Capitol Health vs. Wam Leaders |
| Austco Healthcare vs. FSA Group | Austco Healthcare vs. Tamawood | Austco Healthcare vs. Rea Group | Austco Healthcare vs. CSL |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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