Correlation Between Cultural Investment and Healthcare

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

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

Diversification Opportunities for Cultural Investment and Healthcare

0.65

Correlation Coefficient

Cultural Investment  Healthcare

Poor diversification

The 3 months correlation between Cultural and Healthcare is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Cultural Investment Holdings and Healthcare Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthcare and Cultural Investment 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 Cultural Investment Holdings are associated (or correlated) with Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Healthcare has no effect on the direction of Cultural Investment i.e., Cultural Investment and Healthcare go up and down completely randomly.

Pair Corralation between Cultural Investment and Healthcare

Assuming the 90 days trading horizon Cultural Investment Holdings is expected to generate 1.15 times more return on investment than Healthcare. However, Cultural Investment is 1.15 times more volatile than Healthcare Co. It trades about 0.06 of its potential returns per unit of risk. Healthcare Co is currently generating about -0.02 per unit of risk. If you would invest  198.00  in Cultural Investment Holdings on October 5, 2024 and sell it today you would earn a total of  20.00  from holding Cultural Investment Holdings or generate 10.1% return on investment over 90 days.

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

Cultural Investment Holdings  vs.  Healthcare Co

Cultural Investment

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cultural Investment Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Cultural Investment sustained solid returns over the last few months and may actually be approaching a breakup point.

Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Healthcare Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Healthcare is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cultural Investment and Healthcare

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

The idea behind Cultural Investment Holdings and Healthcare Co 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.