Correlation Between Pacific Hospital and Sunfon Construction
Can any of the company-specific risk be diversified away by investing in both Pacific Hospital and Sunfon Construction 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 Sunfon Construction 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 Sunfon Construction Co, you can compare the effects of market volatilities on Pacific Hospital and Sunfon Construction 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 Sunfon Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacific Hospital and Sunfon Construction.
Diversification Opportunities for Pacific Hospital and Sunfon Construction
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Pacific and Sunfon is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Hospital Supply and Sunfon Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunfon Construction 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 Sunfon Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunfon Construction has no effect on the direction of Pacific Hospital i.e., Pacific Hospital and Sunfon Construction go up and down completely randomly.
Pair Corralation between Pacific Hospital and Sunfon Construction
Assuming the 90 days trading horizon Pacific Hospital Supply is expected to generate 0.6 times more return on investment than Sunfon Construction. However, Pacific Hospital Supply is 1.65 times less risky than Sunfon Construction. It trades about 0.48 of its potential returns per unit of risk. Sunfon Construction Co is currently generating about -0.2 per unit of risk. If you would invest 8,900 in Pacific Hospital Supply on September 25, 2024 and sell it today you would earn a total of 560.00 from holding Pacific Hospital Supply or generate 6.29% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Pacific Hospital Supply vs. Sunfon Construction Co
Performance |
Timeline |
Pacific Hospital Supply |
Sunfon Construction |
Pacific Hospital and Sunfon Construction Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Pacific Hospital and Sunfon Construction
The main advantage of trading using opposite Pacific Hospital and Sunfon Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacific Hospital position performs unexpectedly, Sunfon Construction 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 Sunfon Construction will offset losses from the drop in Sunfon Construction's long position.Pacific Hospital vs. Universal Vision Biotechnology | Pacific Hospital vs. Excelsior Medical Co | Pacific Hospital vs. Delta Asia International | Pacific Hospital vs. Brighten Optix |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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