Correlation Between Capitol Health and Telix Pharmaceuticals

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

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

Diversification Opportunities for Capitol Health and Telix Pharmaceuticals

0.38

Correlation Coefficient

Capitol Health  Telix Pharmaceuticals

Weak diversification

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

Pair Corralation between Capitol Health and Telix Pharmaceuticals

Assuming the 90 days trading horizon Capitol Health is expected to generate 1.09 times less return on investment than Telix Pharmaceuticals. In addition to that, Capitol Health is 1.37 times more volatile than Telix Pharmaceuticals. It trades about 0.16 of its total potential returns per unit of risk. Telix Pharmaceuticals is currently generating about 0.23 per unit of volatility. If you would invest  2,258  in Telix Pharmaceuticals on September 23, 2024 and sell it today you would earn a total of  216.00  from holding Telix Pharmaceuticals or generate 9.57% return on investment over 90 days.

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

Capitol Health  vs.  Telix Pharmaceuticals

Capitol Health

Risk-Adjusted Performance

8 of 100

OK

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

Telix Pharmaceuticals

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Telix Pharmaceuticals are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Telix Pharmaceuticals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Capitol Health and Telix Pharmaceuticals

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

The idea behind Capitol Health and Telix Pharmaceuticals 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.