Correlation Between Waste Management and MyHealthChecked Plc

Can any of the company-specific risk be diversified away by investing in both Waste Management and MyHealthChecked Plc 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 Waste Management and MyHealthChecked Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Waste Management and MyHealthChecked Plc, you can compare the effects of market volatilities on Waste Management and MyHealthChecked Plc 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 Waste Management with a short position of MyHealthChecked Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waste Management and MyHealthChecked Plc.

Diversification Opportunities for Waste Management and MyHealthChecked Plc

-0.14

Correlation Coefficient

Waste Management  MyHealthChecked Plc

Good diversification

The 3 months correlation between Waste and MyHealthChecked is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Waste Management and MyHealthChecked Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MyHealthChecked Plc and Waste Management 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 Waste Management are associated (or correlated) with MyHealthChecked Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MyHealthChecked Plc has no effect on the direction of Waste Management i.e., Waste Management and MyHealthChecked Plc go up and down completely randomly.

Pair Corralation between Waste Management and MyHealthChecked Plc

Assuming the 90 days trading horizon Waste Management is expected to generate 1.98 times less return on investment than MyHealthChecked Plc. But when comparing it to its historical volatility, Waste Management is 3.24 times less risky than MyHealthChecked Plc. It trades about 0.04 of its potential returns per unit of risk. MyHealthChecked Plc is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,175  in MyHealthChecked Plc on October 7, 2024 and sell it today you would earn a total of  50.00  from holding MyHealthChecked Plc or generate 4.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.25%
Values	Daily Returns

Waste Management  vs.  MyHealthChecked Plc

Waste Management

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Waste Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Waste Management is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

MyHealthChecked Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MyHealthChecked Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, MyHealthChecked Plc is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Waste Management and MyHealthChecked Plc

The main advantage of trading using opposite Waste Management and MyHealthChecked Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waste Management position performs unexpectedly, MyHealthChecked Plc 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 MyHealthChecked Plc will offset losses from the drop in MyHealthChecked Plc's long position.

The idea behind Waste Management and MyHealthChecked Plc 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.

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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.