Correlation Between National Health and TOREX SEMICONDUCTOR
Can any of the company-specific risk be diversified away by investing in both National Health and TOREX SEMICONDUCTOR 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 National Health and TOREX SEMICONDUCTOR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Health Investors and TOREX SEMICONDUCTOR LTD, you can compare the effects of market volatilities on National Health and TOREX SEMICONDUCTOR 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 National Health with a short position of TOREX SEMICONDUCTOR. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Health and TOREX SEMICONDUCTOR.
Diversification Opportunities for National Health and TOREX SEMICONDUCTOR
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between National and TOREX is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding National Health Investors and TOREX SEMICONDUCTOR LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOREX SEMICONDUCTOR LTD and National Health 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 National Health Investors are associated (or correlated) with TOREX SEMICONDUCTOR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOREX SEMICONDUCTOR LTD has no effect on the direction of National Health i.e., National Health and TOREX SEMICONDUCTOR go up and down completely randomly.
Pair Corralation between National Health and TOREX SEMICONDUCTOR
Assuming the 90 days trading horizon National Health Investors is expected to generate 1.31 times more return on investment than TOREX SEMICONDUCTOR. However, National Health is 1.31 times more volatile than TOREX SEMICONDUCTOR LTD. It trades about 0.12 of its potential returns per unit of risk. TOREX SEMICONDUCTOR LTD is currently generating about -0.24 per unit of risk. If you would invest 6,900 in National Health Investors on August 27, 2024 and sell it today you would earn a total of 450.00 from holding National Health Investors or generate 6.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Health Investors vs. TOREX SEMICONDUCTOR LTD
Performance |
| Timeline |
| National Health Investors |
| TOREX SEMICONDUCTOR LTD |
National Health and TOREX SEMICONDUCTOR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Health and TOREX SEMICONDUCTOR
The main advantage of trading using opposite National Health and TOREX SEMICONDUCTOR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Health position performs unexpectedly, TOREX SEMICONDUCTOR 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 TOREX SEMICONDUCTOR will offset losses from the drop in TOREX SEMICONDUCTOR's long position.| National Health vs. LG Display Co | National Health vs. Ming Le Sports | National Health vs. USWE SPORTS AB | National Health vs. Gamma Communications plc |
| TOREX SEMICONDUCTOR vs. NVIDIA | TOREX SEMICONDUCTOR vs. NVIDIA | TOREX SEMICONDUCTOR vs. QUALCOMM Incorporated | TOREX SEMICONDUCTOR vs. Intel |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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