Correlation Between Cardinal Health and PT Global

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

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

Diversification Opportunities for Cardinal Health and PT Global

-0.46

Correlation Coefficient

Cardinal Health  PT Global

Very good diversification

The 3 months correlation between Cardinal and 06L is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and PT Global Mediacom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Global Mediacom and Cardinal 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 Cardinal Health are associated (or correlated) with PT Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Global Mediacom has no effect on the direction of Cardinal Health i.e., Cardinal Health and PT Global go up and down completely randomly.

Pair Corralation between Cardinal Health and PT Global

Assuming the 90 days horizon Cardinal Health is expected to generate 7.56 times less return on investment than PT Global. But when comparing it to its historical volatility, Cardinal Health is 12.09 times less risky than PT Global. It trades about 0.08 of its potential returns per unit of risk. PT Global Mediacom is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  0.75  in PT Global Mediacom on September 22, 2024 and sell it today you would lose (0.15) from holding PT Global Mediacom or give up 20.0% of portfolio value over 90 days.

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

Cardinal Health  vs.  PT Global Mediacom

Cardinal Health

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cardinal Health are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Cardinal Health may actually be approaching a critical reversion point that can send shares even higher in January 2025.

PT Global Mediacom

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Global Mediacom 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 Cardinal Health and PT Global

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

The idea behind Cardinal Health and PT Global Mediacom 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..