Correlation Between Healthcare and Ciwen Media

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

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

Diversification Opportunities for Healthcare and Ciwen Media

0.93

Correlation Coefficient

Healthcare  Ciwen Media

Almost no diversification

The 3 months correlation between Healthcare and Ciwen is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Healthcare Co and Ciwen Media Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ciwen Media and 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 Healthcare Co are associated (or correlated) with Ciwen Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ciwen Media has no effect on the direction of Healthcare i.e., Healthcare and Ciwen Media go up and down completely randomly.

Pair Corralation between Healthcare and Ciwen Media

Assuming the 90 days trading horizon Healthcare is expected to generate 1.61 times less return on investment than Ciwen Media. But when comparing it to its historical volatility, Healthcare Co is 1.19 times less risky than Ciwen Media. It trades about 0.16 of its potential returns per unit of risk. Ciwen Media Co is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  509.00  in Ciwen Media Co on September 9, 2024 and sell it today you would earn a total of  282.00  from holding Ciwen Media Co or generate 55.4% return on investment over 90 days.

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

Healthcare Co  vs.  Ciwen Media Co

Healthcare

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Healthcare Co are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Healthcare sustained solid returns over the last few months and may actually be approaching a breakup point.

Ciwen Media

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ciwen Media Co are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ciwen Media sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Healthcare and Ciwen Media

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

The idea behind Healthcare Co and Ciwen Media 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.