Correlation Between Capitol Health and Paladin Energy
Can any of the company-specific risk be diversified away by investing in both Capitol Health and Paladin Energy 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 Paladin Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capitol Health and Paladin Energy, you can compare the effects of market volatilities on Capitol Health and Paladin Energy 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 Paladin Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capitol Health and Paladin Energy.
Diversification Opportunities for Capitol Health and Paladin Energy
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Capitol and Paladin is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Capitol Health and Paladin Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paladin Energy 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 Paladin Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paladin Energy has no effect on the direction of Capitol Health i.e., Capitol Health and Paladin Energy go up and down completely randomly.
Pair Corralation between Capitol Health and Paladin Energy
Assuming the 90 days trading horizon Capitol Health is expected to generate 0.76 times more return on investment than Paladin Energy. However, Capitol Health is 1.32 times less risky than Paladin Energy. It trades about 0.03 of its potential returns per unit of risk. Paladin Energy is currently generating about 0.02 per unit of risk. If you would invest 30.00 in Capitol Health on September 12, 2024 and sell it today you would earn a total of 8.00 from holding Capitol Health or generate 26.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capitol Health vs. Paladin Energy
Performance |
| Timeline |
| Capitol Health |
| Paladin Energy |
Capitol Health and Paladin Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capitol Health and Paladin Energy
The main advantage of trading using opposite Capitol Health and Paladin Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capitol Health position performs unexpectedly, Paladin Energy 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 Paladin Energy will offset losses from the drop in Paladin Energy's long position.| Capitol Health vs. CSL | Capitol Health vs. Tamawood | Capitol Health vs. Cochlear | Capitol Health vs. Rea Group |
| Paladin Energy vs. Black Rock Mining | Paladin Energy vs. BTC Health Limited | Paladin Energy vs. Regis Healthcare | Paladin Energy vs. Capitol Health |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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