Correlation Between Capitol Health and 4Dmedical

Can any of the company-specific risk be diversified away by investing in both Capitol Health and 4Dmedical 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 Capitol Health and 4Dmedical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Capitol Health and 4Dmedical, you can compare the effects of market volatilities on Capitol Health and 4Dmedical 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 Capitol Health with a short position of 4Dmedical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capitol Health and 4Dmedical.

Diversification Opportunities for Capitol Health and 4Dmedical

-0.26

Correlation Coefficient

Capitol Health  4Dmedical

Very good diversification

The 3 months correlation between Capitol and 4Dmedical is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Capitol Health and 4Dmedical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 4Dmedical and Capitol Health 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 Capitol Health are associated (or correlated) with 4Dmedical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 4Dmedical has no effect on the direction of Capitol Health i.e., Capitol Health and 4Dmedical go up and down completely randomly.

Pair Corralation between Capitol Health and 4Dmedical

Assuming the 90 days trading horizon Capitol Health is expected to generate 0.49 times more return on investment than 4Dmedical. However, Capitol Health is 2.05 times less risky than 4Dmedical. It trades about 0.14 of its potential returns per unit of risk. 4Dmedical is currently generating about 0.04 per unit of risk. If you would invest  37.00  in Capitol Health on September 29, 2024 and sell it today you would earn a total of  2.00  from holding Capitol Health or generate 5.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Capitol Health  vs.  4Dmedical

Capitol Health

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Capitol Health are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward-looking indicators, Capitol Health may actually be approaching a critical reversion point that can send shares even higher in January 2025.

4Dmedical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 4Dmedical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Capitol Health and 4Dmedical

The main advantage of trading using opposite Capitol Health and 4Dmedical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capitol Health position performs unexpectedly, 4Dmedical 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 4Dmedical will offset losses from the drop in 4Dmedical's long position.

The idea behind Capitol Health and 4Dmedical 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.