Correlation Between Raffles Medical and Pennant
Can any of the company-specific risk be diversified away by investing in both Raffles Medical and Pennant 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 Raffles Medical and Pennant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Raffles Medical Group and Pennant Group, you can compare the effects of market volatilities on Raffles Medical and Pennant 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 Raffles Medical with a short position of Pennant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Raffles Medical and Pennant.
Diversification Opportunities for Raffles Medical and Pennant
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Raffles and Pennant is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Raffles Medical Group and Pennant Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pennant Group and Raffles 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 Raffles Medical Group are associated (or correlated) with Pennant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pennant Group has no effect on the direction of Raffles Medical i.e., Raffles Medical and Pennant go up and down completely randomly.
Pair Corralation between Raffles Medical and Pennant
Assuming the 90 days horizon Raffles Medical Group is expected to under-perform the Pennant. But the pink sheet apears to be less risky and, when comparing its historical volatility, Raffles Medical Group is 1.69 times less risky than Pennant. The pink sheet trades about -0.14 of its potential returns per unit of risk. The Pennant Group is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,371 in Pennant Group on September 5, 2024 and sell it today you would earn a total of 1,728 from holding Pennant Group or generate 126.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 21.77% |
| Values | Daily Returns |
Raffles Medical Group vs. Pennant Group
Performance |
| Timeline |
| Raffles Medical Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Pennant Group |
Raffles Medical and Pennant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Raffles Medical and Pennant
The main advantage of trading using opposite Raffles Medical and Pennant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Raffles Medical position performs unexpectedly, Pennant 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 Pennant will offset losses from the drop in Pennant's long position.| Raffles Medical vs. Pennant Group | Raffles Medical vs. Surgery Partners | Raffles Medical vs. The Ensign Group | Raffles Medical vs. Encompass Health Corp |
| Pennant vs. Humana Inc | Pennant vs. Elevance Health | Pennant vs. UnitedHealth Group Incorporated | Pennant vs. Molina Healthcare |
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.
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