Correlation Between Vale SA and Hospital Mater
Can any of the company-specific risk be diversified away by investing in both Vale SA and Hospital Mater 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 Vale SA and Hospital Mater into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vale SA and Hospital Mater Dei, you can compare the effects of market volatilities on Vale SA and Hospital Mater 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 Vale SA with a short position of Hospital Mater. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vale SA and Hospital Mater.
Diversification Opportunities for Vale SA and Hospital Mater
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vale and Hospital is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Vale SA and Hospital Mater Dei in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hospital Mater Dei and Vale SA 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 Vale SA are associated (or correlated) with Hospital Mater. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hospital Mater Dei has no effect on the direction of Vale SA i.e., Vale SA and Hospital Mater go up and down completely randomly.
Pair Corralation between Vale SA and Hospital Mater
Assuming the 90 days trading horizon Vale SA is expected to under-perform the Hospital Mater. But the stock apears to be less risky and, when comparing its historical volatility, Vale SA is 1.53 times less risky than Hospital Mater. The stock trades about -0.2 of its potential returns per unit of risk. The Hospital Mater Dei is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 420.00 in Hospital Mater Dei on August 30, 2024 and sell it today you would lose (2.00) from holding Hospital Mater Dei or give up 0.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Vale SA vs. Hospital Mater Dei
Performance |
| Timeline |
| Vale SA |
| Hospital Mater Dei |
Vale SA and Hospital Mater Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vale SA and Hospital Mater
The main advantage of trading using opposite Vale SA and Hospital Mater positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vale SA position performs unexpectedly, Hospital Mater 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 Hospital Mater will offset losses from the drop in Hospital Mater's long position.| Vale SA vs. Petrleo Brasileiro SA | Vale SA vs. Banco do Brasil | Vale SA vs. Ita Unibanco Holding | Vale SA vs. Banco Bradesco SA |
| Hospital Mater vs. Planet Fitness | Hospital Mater vs. Fidelity National Information | Hospital Mater vs. Tyson Foods | Hospital Mater vs. G2D Investments |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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