Correlation Between Danaher and Check-Cap
Can any of the company-specific risk be diversified away by investing in both Danaher and Check-Cap 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 Danaher and Check-Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Danaher and Check Cap, you can compare the effects of market volatilities on Danaher and Check-Cap 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 Danaher with a short position of Check-Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danaher and Check-Cap.
Diversification Opportunities for Danaher and Check-Cap
Poor diversification
The 3 months correlation between Danaher and Check-Cap is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Danaher and Check Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Check Cap and Danaher 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 Danaher are associated (or correlated) with Check-Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Check Cap has no effect on the direction of Danaher i.e., Danaher and Check-Cap go up and down completely randomly.
Pair Corralation between Danaher and Check-Cap
Assuming the 90 days trading horizon Danaher is expected to generate 0.38 times more return on investment than Check-Cap. However, Danaher is 2.65 times less risky than Check-Cap. It trades about -0.02 of its potential returns per unit of risk. Check Cap is currently generating about -0.18 per unit of risk. If you would invest 23,837 in Danaher on September 1, 2024 and sell it today you would lose (1,112) from holding Danaher or give up 4.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Danaher vs. Check Cap
Performance |
| Timeline |
| Danaher |
| Check Cap |
Danaher and Check-Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Danaher and Check-Cap
The main advantage of trading using opposite Danaher and Check-Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danaher position performs unexpectedly, Check-Cap 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 Check-Cap will offset losses from the drop in Check-Cap's long position.| Danaher vs. MeVis Medical Solutions | Danaher vs. Tianjin Capital Environmental | Danaher vs. United States Steel | Danaher vs. BLUESCOPE STEEL |
| Check-Cap vs. Cardinal Health | Check-Cap vs. Sabra Health Care | Check-Cap vs. Natural Health Trends | Check-Cap vs. PKSHA TECHNOLOGY INC |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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