Correlation Between MedFirst Healthcare and Chinese Gamer

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

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

Diversification Opportunities for MedFirst Healthcare and Chinese Gamer

-0.16

Correlation Coefficient

MedFirst Healthcare  Chinese Gamer

Good diversification

The 3 months correlation between MedFirst and Chinese is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding MedFirst Healthcare Services and Chinese Gamer International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chinese Gamer Intern and MedFirst 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 MedFirst Healthcare Services are associated (or correlated) with Chinese Gamer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chinese Gamer Intern has no effect on the direction of MedFirst Healthcare i.e., MedFirst Healthcare and Chinese Gamer go up and down completely randomly.

Pair Corralation between MedFirst Healthcare and Chinese Gamer

Assuming the 90 days trading horizon MedFirst Healthcare Services is expected to under-perform the Chinese Gamer. But the stock apears to be less risky and, when comparing its historical volatility, MedFirst Healthcare Services is 2.57 times less risky than Chinese Gamer. The stock trades about -0.19 of its potential returns per unit of risk. The Chinese Gamer International is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  4,335  in Chinese Gamer International on September 5, 2024 and sell it today you would earn a total of  165.00  from holding Chinese Gamer International or generate 3.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

MedFirst Healthcare Services  vs.  Chinese Gamer International

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 fairly stable basic indicators, MedFirst Healthcare is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Chinese Gamer Intern

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Chinese Gamer International are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Chinese Gamer 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 MedFirst Healthcare and Chinese Gamer

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

The idea behind MedFirst Healthcare Services and Chinese Gamer International 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.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.