Correlation Between CM Hospitalar and New Oriental
Can any of the company-specific risk be diversified away by investing in both CM Hospitalar and New Oriental 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 CM Hospitalar and New Oriental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CM Hospitalar SA and New Oriental Education, you can compare the effects of market volatilities on CM Hospitalar and New Oriental 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 CM Hospitalar with a short position of New Oriental. Check out your portfolio center. Please also check ongoing floating volatility patterns of CM Hospitalar and New Oriental.
Diversification Opportunities for CM Hospitalar and New Oriental
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between VVEO3 and New is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding CM Hospitalar SA and New Oriental Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Oriental Education and CM Hospitalar 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 CM Hospitalar SA are associated (or correlated) with New Oriental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Oriental Education has no effect on the direction of CM Hospitalar i.e., CM Hospitalar and New Oriental go up and down completely randomly.
Pair Corralation between CM Hospitalar and New Oriental
Assuming the 90 days trading horizon CM Hospitalar SA is expected to generate 2.33 times more return on investment than New Oriental. However, CM Hospitalar is 2.33 times more volatile than New Oriental Education. It trades about 0.0 of its potential returns per unit of risk. New Oriental Education is currently generating about -0.08 per unit of risk. If you would invest 207.00 in CM Hospitalar SA on September 2, 2024 and sell it today you would lose (9.00) from holding CM Hospitalar SA or give up 4.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CM Hospitalar SA vs. New Oriental Education
Performance |
| Timeline |
| CM Hospitalar SA |
| New Oriental Education |
CM Hospitalar and New Oriental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CM Hospitalar and New Oriental
The main advantage of trading using opposite CM Hospitalar and New Oriental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CM Hospitalar position performs unexpectedly, New Oriental 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 New Oriental will offset losses from the drop in New Oriental's long position.| CM Hospitalar vs. Profarma Distribuidora de | CM Hospitalar vs. Fras le SA | CM Hospitalar vs. Western Digital | CM Hospitalar vs. Energisa SA |
| New Oriental vs. Fras le SA | New Oriental vs. Energisa SA | New Oriental vs. Clave Indices De | New Oriental vs. BTG Pactual Logstica |
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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