Correlation Between Molina Healthcare and Chongqing Machinery
Can any of the company-specific risk be diversified away by investing in both Molina Healthcare and Chongqing Machinery 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 Molina Healthcare and Chongqing Machinery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Molina Healthcare and Chongqing Machinery Electric, you can compare the effects of market volatilities on Molina Healthcare and Chongqing Machinery 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 Molina Healthcare with a short position of Chongqing Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Molina Healthcare and Chongqing Machinery.
Diversification Opportunities for Molina Healthcare and Chongqing Machinery
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Molina and Chongqing is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Molina Healthcare and Chongqing Machinery Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chongqing Machinery and Molina Healthcare 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 Molina Healthcare are associated (or correlated) with Chongqing Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chongqing Machinery has no effect on the direction of Molina Healthcare i.e., Molina Healthcare and Chongqing Machinery go up and down completely randomly.
Pair Corralation between Molina Healthcare and Chongqing Machinery
Assuming the 90 days trading horizon Molina Healthcare is expected to generate 0.18 times more return on investment than Chongqing Machinery. However, Molina Healthcare is 5.67 times less risky than Chongqing Machinery. It trades about 0.14 of its potential returns per unit of risk. Chongqing Machinery Electric is currently generating about -0.03 per unit of risk. If you would invest 27,880 in Molina Healthcare on October 26, 2024 and sell it today you would earn a total of 1,270 from holding Molina Healthcare or generate 4.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Molina Healthcare vs. Chongqing Machinery Electric
Performance |
| Timeline |
| Molina Healthcare |
| Chongqing Machinery |
Molina Healthcare and Chongqing Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Molina Healthcare and Chongqing Machinery
The main advantage of trading using opposite Molina Healthcare and Chongqing Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Molina Healthcare position performs unexpectedly, Chongqing Machinery 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 Chongqing Machinery will offset losses from the drop in Chongqing Machinery's long position.| Molina Healthcare vs. Hanison Construction Holdings | Molina Healthcare vs. HANOVER INSURANCE | Molina Healthcare vs. QBE Insurance Group | Molina Healthcare vs. UNIQA INSURANCE GR |
| Chongqing Machinery vs. Zoom Video Communications | Chongqing Machinery vs. G III Apparel Group | Chongqing Machinery vs. Entravision Communications | Chongqing Machinery vs. TELECOM ITALIA |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |