Correlation Between Concord Medical and National HealthCare

Can any of the company-specific risk be diversified away by investing in both Concord Medical and National 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 Concord Medical and National HealthCare into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Concord Medical Services and National HealthCare, you can compare the effects of market volatilities on Concord Medical and National 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 Concord Medical with a short position of National HealthCare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Concord Medical and National HealthCare.

Diversification Opportunities for Concord Medical and National HealthCare

-0.49

Correlation Coefficient

Concord Medical  National HealthCare

Very good diversification

The 3 months correlation between Concord and National is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Concord Medical Services and National HealthCare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National HealthCare and Concord Medical 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 Concord Medical Services are associated (or correlated) with National HealthCare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National HealthCare has no effect on the direction of Concord Medical i.e., Concord Medical and National HealthCare go up and down completely randomly.

Pair Corralation between Concord Medical and National HealthCare

Considering the 90-day investment horizon Concord Medical Services is expected to under-perform the National HealthCare. In addition to that, Concord Medical is 3.0 times more volatile than National HealthCare. It trades about -0.24 of its total potential returns per unit of risk. National HealthCare is currently generating about 0.1 per unit of volatility. If you would invest  11,950  in National HealthCare on September 2, 2024 and sell it today you would earn a total of  570.00  from holding National HealthCare or generate 4.77% return on investment over 90 days.

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

Concord Medical Services  vs.  National HealthCare

Concord Medical Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Concord Medical Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

National HealthCare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National HealthCare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical indicators, National HealthCare is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Concord Medical and National HealthCare

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

The idea behind Concord Medical Services and National HealthCare 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.