Correlation Between Excelsior Medical and Prince Housing

Can any of the company-specific risk be diversified away by investing in both Excelsior Medical and Prince Housing 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 Excelsior Medical and Prince Housing into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Excelsior Medical Co and Prince Housing Development, you can compare the effects of market volatilities on Excelsior Medical and Prince Housing 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 Excelsior Medical with a short position of Prince Housing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Excelsior Medical and Prince Housing.

Diversification Opportunities for Excelsior Medical and Prince Housing

0.2

Correlation Coefficient

Excelsior Medical  Prince Housing

Modest diversification

The 3 months correlation between Excelsior and Prince is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Excelsior Medical Co and Prince Housing Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prince Housing Devel and Excelsior Medical 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 Excelsior Medical Co are associated (or correlated) with Prince Housing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prince Housing Devel has no effect on the direction of Excelsior Medical i.e., Excelsior Medical and Prince Housing go up and down completely randomly.

Pair Corralation between Excelsior Medical and Prince Housing

Assuming the 90 days trading horizon Excelsior Medical Co is expected to generate 0.83 times more return on investment than Prince Housing. However, Excelsior Medical Co is 1.21 times less risky than Prince Housing. It trades about 0.05 of its potential returns per unit of risk. Prince Housing Development is currently generating about 0.01 per unit of risk. If you would invest  6,760  in Excelsior Medical Co on September 20, 2024 and sell it today you would earn a total of  1,880  from holding Excelsior Medical Co or generate 27.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Excelsior Medical Co  vs.  Prince Housing Development

Excelsior Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Excelsior Medical Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Excelsior Medical is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Prince Housing Devel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prince Housing Development has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Prince Housing is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Excelsior Medical and Prince Housing

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

The idea behind Excelsior Medical Co and Prince Housing Development 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.