Correlation Between American Shared and Centene Corp

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

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

Diversification Opportunities for American Shared and Centene Corp

-0.32

Correlation Coefficient

American Shared  Centene Corp

Very good diversification

The 3 months correlation between American and Centene is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding American Shared Hospital and Centene Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centene Corp and American Shared 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 American Shared Hospital 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 American Shared i.e., American Shared and Centene Corp go up and down completely randomly.

Pair Corralation between American Shared and Centene Corp

Considering the 90-day investment horizon American Shared Hospital is expected to generate 0.96 times more return on investment than Centene Corp. However, American Shared Hospital is 1.04 times less risky than Centene Corp. It trades about 0.04 of its potential returns per unit of risk. Centene Corp is currently generating about -0.18 per unit of risk. If you would invest  308.00  in American Shared Hospital on September 1, 2024 and sell it today you would earn a total of  14.00  from holding American Shared Hospital or generate 4.55% return on investment over 90 days.

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

American Shared Hospital  vs.  Centene Corp

American Shared Hospital

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in American Shared Hospital are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable primary indicators, American Shared is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Centene Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Centene Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with American Shared and Centene Corp

The main advantage of trading using opposite American Shared and Centene Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Shared 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 American Shared Hospital 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.