Correlation Between PM Capital and Oceania Healthcare
Can any of the company-specific risk be diversified away by investing in both PM Capital 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 PM Capital and Oceania Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PM Capital Global and Oceania Healthcare, you can compare the effects of market volatilities on PM Capital 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 PM Capital with a short position of Oceania Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of PM Capital and Oceania Healthcare.
Diversification Opportunities for PM Capital and Oceania Healthcare
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between PGF and Oceania is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding PM Capital Global and Oceania Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oceania Healthcare and PM Capital 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 PM Capital Global 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 PM Capital i.e., PM Capital and Oceania Healthcare go up and down completely randomly.
Pair Corralation between PM Capital and Oceania Healthcare
Assuming the 90 days trading horizon PM Capital Global is expected to under-perform the Oceania Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, PM Capital Global is 3.36 times less risky than Oceania Healthcare. The stock trades about -0.04 of its potential returns per unit of risk. The Oceania Healthcare is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 64.00 in Oceania Healthcare on August 29, 2024 and sell it today you would earn a total of 1.00 from holding Oceania Healthcare or generate 1.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PM Capital Global vs. Oceania Healthcare
Performance |
| Timeline |
| PM Capital Global |
| Oceania Healthcare |
PM Capital and Oceania Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PM Capital and Oceania Healthcare
The main advantage of trading using opposite PM Capital and Oceania Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PM Capital 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.| PM Capital vs. National Australia Bank | PM Capital vs. National Australia Bank | PM Capital vs. Westpac Banking | PM Capital vs. National Australia Bank |
| Oceania Healthcare vs. Inventis | Oceania Healthcare vs. PM Capital Global | Oceania Healthcare vs. Macquarie Group Ltd | Oceania Healthcare vs. Wam Leaders |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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