Correlation Between Medicover and Centene Corp

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

By analyzing existing cross correlation between Medicover AB and Centene Corp, you can compare the effects of market volatilities on Medicover and Centene Corp 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 Medicover with a short position of Centene Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medicover and Centene Corp.

Diversification Opportunities for Medicover and Centene Corp

0.09

Correlation Coefficient

Medicover  Centene Corp

Significant diversification

The 3 months correlation between Medicover and Centene is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Medicover AB and Centene Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centene Corp and Medicover 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 Medicover AB are associated (or correlated) with Centene Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centene Corp has no effect on the direction of Medicover i.e., Medicover and Centene Corp go up and down completely randomly.

Pair Corralation between Medicover and Centene Corp

Assuming the 90 days trading horizon Medicover AB is expected to generate 0.96 times more return on investment than Centene Corp. However, Medicover AB is 1.04 times less risky than Centene Corp. It trades about 0.17 of its potential returns per unit of risk. Centene Corp is currently generating about 0.0 per unit of risk. If you would invest  1,550  in Medicover AB on December 4, 2024 and sell it today you would earn a total of  262.00  from holding Medicover AB or generate 16.9% return on investment over 90 days.

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

Medicover AB  vs.  Centene Corp

Medicover AB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Medicover AB are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Medicover reported solid returns over the last few months and may actually be approaching a breakup point.

Centene Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Centene Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Centene Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Medicover and Centene Corp

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

The idea behind Medicover AB and Centene Corp 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.