Correlation Between CIM FINANCIAL and BEAU VALLON

Can any of the company-specific risk be diversified away by investing in both CIM FINANCIAL and BEAU VALLON 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 CIM FINANCIAL and BEAU VALLON into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CIM FINANCIAL SERVICES and BEAU VALLON HOSPITAL, you can compare the effects of market volatilities on CIM FINANCIAL and BEAU VALLON 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 CIM FINANCIAL with a short position of BEAU VALLON. Check out your portfolio center. Please also check ongoing floating volatility patterns of CIM FINANCIAL and BEAU VALLON.

Diversification Opportunities for CIM FINANCIAL and BEAU VALLON

0.01

Correlation Coefficient

CIM FINANCIAL  BEAU VALLON

Significant diversification

The 3 months correlation between CIM and BEAU is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding CIM FINANCIAL SERVICES and BEAU VALLON HOSPITAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BEAU VALLON HOSPITAL and CIM FINANCIAL 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 CIM FINANCIAL SERVICES are associated (or correlated) with BEAU VALLON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BEAU VALLON HOSPITAL has no effect on the direction of CIM FINANCIAL i.e., CIM FINANCIAL and BEAU VALLON go up and down completely randomly.

Pair Corralation between CIM FINANCIAL and BEAU VALLON

Assuming the 90 days trading horizon CIM FINANCIAL SERVICES is expected to generate 2.17 times more return on investment than BEAU VALLON. However, CIM FINANCIAL is 2.17 times more volatile than BEAU VALLON HOSPITAL. It trades about 0.24 of its potential returns per unit of risk. BEAU VALLON HOSPITAL is currently generating about 0.22 per unit of risk. If you would invest  1,250  in CIM FINANCIAL SERVICES on September 28, 2024 and sell it today you would earn a total of  100.00  from holding CIM FINANCIAL SERVICES or generate 8.0% return on investment over 90 days.

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

CIM FINANCIAL SERVICES  vs.  BEAU VALLON HOSPITAL

CIM FINANCIAL SERVICES

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CIM FINANCIAL SERVICES are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady primary indicators, CIM FINANCIAL displayed solid returns over the last few months and may actually be approaching a breakup point.

BEAU VALLON HOSPITAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BEAU VALLON HOSPITAL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, BEAU VALLON is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with CIM FINANCIAL and BEAU VALLON

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

The idea behind CIM FINANCIAL SERVICES and BEAU VALLON HOSPITAL 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.