Correlation Between BenQ Medical and MedFirst Healthcare

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

By analyzing existing cross correlation between BenQ Medical Technology and MedFirst Healthcare Services, you can compare the effects of market volatilities on BenQ Medical and MedFirst Healthcare 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 BenQ Medical with a short position of MedFirst Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of BenQ Medical and MedFirst Healthcare.

Diversification Opportunities for BenQ Medical and MedFirst Healthcare

0.75

Correlation Coefficient

BenQ Medical  MedFirst Healthcare

Poor diversification

The 3 months correlation between BenQ and MedFirst is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding BenQ Medical Technology and MedFirst Healthcare Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MedFirst Healthcare and BenQ 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 BenQ Medical Technology are associated (or correlated) with MedFirst Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MedFirst Healthcare has no effect on the direction of BenQ Medical i.e., BenQ Medical and MedFirst Healthcare go up and down completely randomly.

Pair Corralation between BenQ Medical and MedFirst Healthcare

Assuming the 90 days trading horizon BenQ Medical Technology is expected to generate 2.05 times more return on investment than MedFirst Healthcare. However, BenQ Medical is 2.05 times more volatile than MedFirst Healthcare Services. It trades about -0.13 of its potential returns per unit of risk. MedFirst Healthcare Services is currently generating about -0.3 per unit of risk. If you would invest  5,210  in BenQ Medical Technology on September 15, 2024 and sell it today you would lose (400.00) from holding BenQ Medical Technology or give up 7.68% of portfolio value over 90 days.

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

BenQ Medical Technology  vs.  MedFirst Healthcare Services

BenQ Medical Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BenQ Medical Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

MedFirst Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MedFirst Healthcare Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with BenQ Medical and MedFirst Healthcare

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

The idea behind BenQ Medical Technology and MedFirst Healthcare Services 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.