Correlation Between National Health and Arca Continental
Can any of the company-specific risk be diversified away by investing in both National Health and Arca Continental 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 National Health and Arca Continental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Health Scan and Arca Continental SAB, you can compare the effects of market volatilities on National Health and Arca Continental 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 National Health with a short position of Arca Continental. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Health and Arca Continental.
Diversification Opportunities for National Health and Arca Continental
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between National and Arca is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding National Health Scan and Arca Continental SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arca Continental SAB and National 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 National Health Scan are associated (or correlated) with Arca Continental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arca Continental SAB has no effect on the direction of National Health i.e., National Health and Arca Continental go up and down completely randomly.
Pair Corralation between National Health and Arca Continental
Given the investment horizon of 90 days National Health Scan is expected to generate 4.9 times more return on investment than Arca Continental. However, National Health is 4.9 times more volatile than Arca Continental SAB. It trades about 0.31 of its potential returns per unit of risk. Arca Continental SAB is currently generating about -0.06 per unit of risk. If you would invest 1.10 in National Health Scan on October 20, 2024 and sell it today you would earn a total of 0.80 from holding National Health Scan or generate 72.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Health Scan vs. Arca Continental SAB
Performance |
| Timeline |
| National Health Scan |
| Arca Continental SAB |
National Health and Arca Continental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Health and Arca Continental
The main advantage of trading using opposite National Health and Arca Continental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Health position performs unexpectedly, Arca Continental 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 Arca Continental will offset losses from the drop in Arca Continental's long position.| National Health vs. Emergent Health Corp | National Health vs. One World Universe | National Health vs. Nextmart | National Health vs. HeadsUp Entertainment International |
| Arca Continental vs. Embotelladora Andina SA | Arca Continental vs. PT Astra International | Arca Continental vs. Embotelladora Andina SA | Arca Continental vs. Alkame Holdings |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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