Correlation Between Japan Medical and Option Care
Can any of the company-specific risk be diversified away by investing in both Japan Medical and Option Care 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 Japan Medical and Option Care into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Japan Medical Dynamic and Option Care Health, you can compare the effects of market volatilities on Japan Medical and Option Care 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 Japan Medical with a short position of Option Care. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Medical and Option Care.
Diversification Opportunities for Japan Medical and Option Care
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Japan and Option is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Japan Medical Dynamic and Option Care Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Option Care Health and Japan Medical 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 Japan Medical Dynamic are associated (or correlated) with Option Care. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Option Care Health has no effect on the direction of Japan Medical i.e., Japan Medical and Option Care go up and down completely randomly.
Pair Corralation between Japan Medical and Option Care
Assuming the 90 days horizon Japan Medical is expected to generate 3.06 times less return on investment than Option Care. But when comparing it to its historical volatility, Japan Medical Dynamic is 1.7 times less risky than Option Care. It trades about 0.22 of its potential returns per unit of risk. Option Care Health is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 2,180 in Option Care Health on October 20, 2024 and sell it today you would earn a total of 620.00 from holding Option Care Health or generate 28.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Japan Medical Dynamic vs. Option Care Health
Performance |
| Timeline |
| Japan Medical Dynamic |
| Option Care Health |
Japan Medical and Option Care Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Medical and Option Care
The main advantage of trading using opposite Japan Medical and Option Care positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Medical position performs unexpectedly, Option Care 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 Option Care will offset losses from the drop in Option Care's long position.| Japan Medical vs. Methode Electronics | Japan Medical vs. STMICROELECTRONICS | Japan Medical vs. Electronic Arts | Japan Medical vs. GEAR4MUSIC LS 10 |
| Option Care vs. Fresenius SE Co | Option Care vs. Fresenius Medical Care | Option Care vs. HYGEIA HC HLDGS | Option Care vs. UNIPHAR PLC EO |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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