Correlation Between Power Wind and MedFirst Healthcare

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

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

Diversification Opportunities for Power Wind and MedFirst Healthcare

0.38

Correlation Coefficient

Power Wind  MedFirst Healthcare

Weak diversification

The 3 months correlation between Power and MedFirst is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Power Wind Health and MedFirst Healthcare Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MedFirst Healthcare and Power Wind 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 Power Wind Health are associated (or correlated) with MedFirst Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MedFirst Healthcare has no effect on the direction of Power Wind i.e., Power Wind and MedFirst Healthcare go up and down completely randomly.

Pair Corralation between Power Wind and MedFirst Healthcare

Assuming the 90 days trading horizon Power Wind Health is expected to generate 1.79 times more return on investment than MedFirst Healthcare. However, Power Wind is 1.79 times more volatile than MedFirst Healthcare Services. It trades about 0.11 of its potential returns per unit of risk. MedFirst Healthcare Services is currently generating about 0.01 per unit of risk. If you would invest  11,200  in Power Wind Health on December 4, 2024 and sell it today you would earn a total of  1,100  from holding Power Wind Health or generate 9.82% return on investment over 90 days.

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

Power Wind Health  vs.  MedFirst Healthcare Services

Power Wind Health

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Power Wind Health are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Power Wind may actually be approaching a critical reversion point that can send shares even higher in April 2025.

MedFirst Healthcare

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MedFirst Healthcare Services are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Power Wind and MedFirst Healthcare

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

The idea behind Power Wind Health and MedFirst Healthcare Services 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.