Correlation Between CHC Healthcare and Medigen Biotechnology
Can any of the company-specific risk be diversified away by investing in both CHC Healthcare and Medigen Biotechnology 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 CHC Healthcare and Medigen Biotechnology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHC Healthcare Group and Medigen Biotechnology, you can compare the effects of market volatilities on CHC Healthcare and Medigen Biotechnology 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 CHC Healthcare with a short position of Medigen Biotechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHC Healthcare and Medigen Biotechnology.
Diversification Opportunities for CHC Healthcare and Medigen Biotechnology
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CHC and Medigen is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding CHC Healthcare Group and Medigen Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medigen Biotechnology and CHC Healthcare 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 CHC Healthcare Group are associated (or correlated) with Medigen Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medigen Biotechnology has no effect on the direction of CHC Healthcare i.e., CHC Healthcare and Medigen Biotechnology go up and down completely randomly.
Pair Corralation between CHC Healthcare and Medigen Biotechnology
Assuming the 90 days trading horizon CHC Healthcare Group is expected to generate 1.42 times more return on investment than Medigen Biotechnology. However, CHC Healthcare is 1.42 times more volatile than Medigen Biotechnology. It trades about -0.03 of its potential returns per unit of risk. Medigen Biotechnology is currently generating about -0.19 per unit of risk. If you would invest 4,290 in CHC Healthcare Group on September 24, 2024 and sell it today you would lose (225.00) from holding CHC Healthcare Group or give up 5.24% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
CHC Healthcare Group vs. Medigen Biotechnology
Performance |
Timeline |
CHC Healthcare Group |
Medigen Biotechnology |
CHC Healthcare and Medigen Biotechnology Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CHC Healthcare and Medigen Biotechnology
The main advantage of trading using opposite CHC Healthcare and Medigen Biotechnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHC Healthcare position performs unexpectedly, Medigen Biotechnology 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 Medigen Biotechnology will offset losses from the drop in Medigen Biotechnology's long position.CHC Healthcare vs. Phytohealth Corp | CHC Healthcare vs. GenMont Biotech | CHC Healthcare vs. Hung Sheng Construction | CHC Healthcare vs. De Licacy Industrial |
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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