Correlation Between Pacific Hospital and ScinoPharm Taiwan

Can any of the company-specific risk be diversified away by investing in both Pacific Hospital and ScinoPharm Taiwan 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 Pacific Hospital and ScinoPharm Taiwan into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pacific Hospital Supply and ScinoPharm Taiwan, you can compare the effects of market volatilities on Pacific Hospital and ScinoPharm Taiwan 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 Pacific Hospital with a short position of ScinoPharm Taiwan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacific Hospital and ScinoPharm Taiwan.

Diversification Opportunities for Pacific Hospital and ScinoPharm Taiwan

-0.75

Correlation Coefficient

Pacific Hospital  ScinoPharm Taiwan

Pay attention - limited upside

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

Pair Corralation between Pacific Hospital and ScinoPharm Taiwan

Assuming the 90 days trading horizon Pacific Hospital Supply is expected to generate 0.79 times more return on investment than ScinoPharm Taiwan. However, Pacific Hospital Supply is 1.26 times less risky than ScinoPharm Taiwan. It trades about 0.07 of its potential returns per unit of risk. ScinoPharm Taiwan is currently generating about -0.04 per unit of risk. If you would invest  9,080  in Pacific Hospital Supply on December 5, 2024 and sell it today you would earn a total of  290.00  from holding Pacific Hospital Supply or generate 3.19% return on investment over 90 days.

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

Pacific Hospital Supply  vs.  ScinoPharm Taiwan

Pacific Hospital Supply

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pacific Hospital Supply are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Pacific Hospital is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

ScinoPharm Taiwan

Risk-Adjusted Performance

Very Weak

Over the last 90 days ScinoPharm Taiwan has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, ScinoPharm Taiwan 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 Pacific Hospital and ScinoPharm Taiwan

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

The idea behind Pacific Hospital Supply and ScinoPharm Taiwan 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.