Correlation Between Honda and CM Hospitalar
Can any of the company-specific risk be diversified away by investing in both Honda and CM Hospitalar 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 Honda and CM Hospitalar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Honda Motor Co and CM Hospitalar SA, you can compare the effects of market volatilities on Honda and CM Hospitalar 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 Honda with a short position of CM Hospitalar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Honda and CM Hospitalar.
Diversification Opportunities for Honda and CM Hospitalar
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Honda and VVEO3 is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Honda Motor Co and CM Hospitalar SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CM Hospitalar SA and Honda 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 Honda Motor Co are associated (or correlated) with CM Hospitalar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CM Hospitalar SA has no effect on the direction of Honda i.e., Honda and CM Hospitalar go up and down completely randomly.
Pair Corralation between Honda and CM Hospitalar
Assuming the 90 days trading horizon Honda Motor Co is expected to under-perform the CM Hospitalar. But the stock apears to be less risky and, when comparing its historical volatility, Honda Motor Co is 2.65 times less risky than CM Hospitalar. The stock trades about -0.24 of its potential returns per unit of risk. The CM Hospitalar SA is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 201.00 in CM Hospitalar SA on August 28, 2024 and sell it today you would lose (7.00) from holding CM Hospitalar SA or give up 3.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Honda Motor Co vs. CM Hospitalar SA
Performance |
| Timeline |
| Honda Motor |
| CM Hospitalar SA |
Honda and CM Hospitalar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Honda and CM Hospitalar
The main advantage of trading using opposite Honda and CM Hospitalar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Honda position performs unexpectedly, CM Hospitalar 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 CM Hospitalar will offset losses from the drop in CM Hospitalar's long position.| Honda vs. Marcopolo SA | Honda vs. Randon SA Implementos | Honda vs. Fras le SA | Honda vs. Indstrias Romi SA |
| CM Hospitalar vs. Fras le SA | CM Hospitalar vs. Western Digital | CM Hospitalar vs. Clave Indices De | CM Hospitalar vs. BTG Pactual Logstica |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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