Correlation Between CHAR Technologies and Medical Facilities

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Can any of the company-specific risk be diversified away by investing in both CHAR Technologies and Medical Facilities 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 CHAR Technologies and Medical Facilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHAR Technologies and Medical Facilities, you can compare the effects of market volatilities on CHAR Technologies and Medical Facilities 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 CHAR Technologies with a short position of Medical Facilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHAR Technologies and Medical Facilities.

Diversification Opportunities for CHAR Technologies and Medical Facilities

-0.68
  Correlation Coefficient

Excellent diversification

The 3 months correlation between CHAR and Medical is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding CHAR Technologies and Medical Facilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medical Facilities and CHAR Technologies 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 CHAR Technologies are associated (or correlated) with Medical Facilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medical Facilities has no effect on the direction of CHAR Technologies i.e., CHAR Technologies and Medical Facilities go up and down completely randomly.

Pair Corralation between CHAR Technologies and Medical Facilities

Assuming the 90 days horizon CHAR Technologies is expected to under-perform the Medical Facilities. In addition to that, CHAR Technologies is 2.53 times more volatile than Medical Facilities. It trades about -0.14 of its total potential returns per unit of risk. Medical Facilities is currently generating about 0.11 per unit of volatility. If you would invest  1,469  in Medical Facilities on August 24, 2024 and sell it today you would earn a total of  75.00  from holding Medical Facilities or generate 5.11% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy95.65%
ValuesDaily Returns

CHAR Technologies  vs.  Medical Facilities

 Performance 
       Timeline  
CHAR Technologies 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days CHAR Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in December 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.
Medical Facilities 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Medical Facilities are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Medical Facilities may actually be approaching a critical reversion point that can send shares even higher in December 2024.

CHAR Technologies and Medical Facilities Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with CHAR Technologies and Medical Facilities

The main advantage of trading using opposite CHAR Technologies and Medical Facilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHAR Technologies position performs unexpectedly, Medical Facilities 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 Medical Facilities will offset losses from the drop in Medical Facilities' long position.
The idea behind CHAR Technologies and Medical Facilities pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.

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