Correlation Between CVC Technologies and SS Healthcare

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

By analyzing existing cross correlation between CVC Technologies and SS Healthcare Holding, you can compare the effects of market volatilities on CVC Technologies and SS 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 CVC Technologies with a short position of SS Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVC Technologies and SS Healthcare.

Diversification Opportunities for CVC Technologies and SS Healthcare

-0.07

Correlation Coefficient

CVC Technologies  SS Healthcare

Good diversification

The 3 months correlation between CVC and 4198 is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding CVC Technologies and SS Healthcare Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SS Healthcare Holding and CVC Technologies 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 CVC Technologies are associated (or correlated) with SS Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SS Healthcare Holding has no effect on the direction of CVC Technologies i.e., CVC Technologies and SS Healthcare go up and down completely randomly.

Pair Corralation between CVC Technologies and SS Healthcare

Assuming the 90 days trading horizon CVC Technologies is expected to generate 1.18 times more return on investment than SS Healthcare. However, CVC Technologies is 1.18 times more volatile than SS Healthcare Holding. It trades about 0.13 of its potential returns per unit of risk. SS Healthcare Holding is currently generating about 0.02 per unit of risk. If you would invest  2,005  in CVC Technologies on October 19, 2024 and sell it today you would earn a total of  175.00  from holding CVC Technologies or generate 8.73% return on investment over 90 days.

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

CVC Technologies  vs.  SS Healthcare Holding

CVC Technologies

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CVC Technologies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, CVC Technologies is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

SS Healthcare Holding

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SS Healthcare Holding are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, SS Healthcare 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 CVC Technologies and SS Healthcare

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

The idea behind CVC Technologies and SS Healthcare Holding 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.