Correlation Between High Tech and Oceania Healthcare
Can any of the company-specific risk be diversified away by investing in both High Tech and Oceania 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 High Tech and Oceania Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between High Tech Metals and Oceania Healthcare, you can compare the effects of market volatilities on High Tech and Oceania 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 High Tech with a short position of Oceania Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of High Tech and Oceania Healthcare.
Diversification Opportunities for High Tech and Oceania Healthcare
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between High and Oceania is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding High Tech Metals and Oceania Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oceania Healthcare and High Tech 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 High Tech Metals are associated (or correlated) with Oceania Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oceania Healthcare has no effect on the direction of High Tech i.e., High Tech and Oceania Healthcare go up and down completely randomly.
Pair Corralation between High Tech and Oceania Healthcare
Assuming the 90 days trading horizon High Tech Metals is expected to under-perform the Oceania Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, High Tech Metals is 2.0 times less risky than Oceania Healthcare. The stock trades about -0.22 of its potential returns per unit of risk. The Oceania Healthcare is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 60.00 in Oceania Healthcare on November 3, 2024 and sell it today you would earn a total of 13.00 from holding Oceania Healthcare or generate 21.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
High Tech Metals vs. Oceania Healthcare
Performance |
| Timeline |
| High Tech Metals |
| Oceania Healthcare |
High Tech and Oceania Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High Tech and Oceania Healthcare
The main advantage of trading using opposite High Tech and Oceania Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High Tech position performs unexpectedly, Oceania 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 Oceania Healthcare will offset losses from the drop in Oceania Healthcare's long position.| High Tech vs. Northern Star Resources | High Tech vs. Evolution Mining | High Tech vs. Bluescope Steel | High Tech vs. Sandfire Resources NL |
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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 Valuation module to check real value of public entities based on technical and fundamental data.
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