Correlation Between Byke Hospitality and Medplus Health

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

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

Diversification Opportunities for Byke Hospitality and Medplus Health

0.8

Correlation Coefficient

Byke Hospitality  Medplus Health

Very poor diversification

The 3 months correlation between Byke and Medplus is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding The Byke Hospitality and Medplus Health Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medplus Health Services and Byke Hospitality 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 The Byke Hospitality are associated (or correlated) with Medplus Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medplus Health Services has no effect on the direction of Byke Hospitality i.e., Byke Hospitality and Medplus Health go up and down completely randomly.

Pair Corralation between Byke Hospitality and Medplus Health

Assuming the 90 days trading horizon The Byke Hospitality is expected to generate 1.34 times more return on investment than Medplus Health. However, Byke Hospitality is 1.34 times more volatile than Medplus Health Services. It trades about -0.17 of its potential returns per unit of risk. Medplus Health Services is currently generating about -0.26 per unit of risk. If you would invest  9,570  in The Byke Hospitality on October 25, 2024 and sell it today you would lose (976.00) from holding The Byke Hospitality or give up 10.2% of portfolio value over 90 days.

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

The Byke Hospitality  vs.  Medplus Health Services

Byke Hospitality

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Byke Hospitality are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Byke Hospitality unveiled solid returns over the last few months and may actually be approaching a breakup point.

Medplus Health Services

Risk-Adjusted Performance

8 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Medplus Health Services are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating essential indicators, Medplus Health unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Byke Hospitality and Medplus Health

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

The idea behind The Byke Hospitality and Medplus Health 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.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.