Correlation Between Cardinal Health and Stockland

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

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

Diversification Opportunities for Cardinal Health and Stockland

0.69

Correlation Coefficient

Cardinal Health  Stockland

Poor diversification

The 3 months correlation between Cardinal and Stockland is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and Stockland in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stockland 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 Stockland. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stockland has no effect on the direction of Cardinal Health i.e., Cardinal Health and Stockland go up and down completely randomly.

Pair Corralation between Cardinal Health and Stockland

Assuming the 90 days horizon Cardinal Health is expected to generate 0.96 times more return on investment than Stockland. However, Cardinal Health is 1.05 times less risky than Stockland. It trades about 0.1 of its potential returns per unit of risk. Stockland is currently generating about 0.02 per unit of risk. If you would invest  11,335  in Cardinal Health on December 24, 2024 and sell it today you would earn a total of  900.00  from holding Cardinal Health or generate 7.94% return on investment over 90 days.

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

Cardinal Health  vs.  Stockland

Cardinal Health

Risk-Adjusted Performance

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 uncertain basic indicators, Cardinal Health may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Stockland

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Stockland are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Stockland is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Cardinal Health and Stockland

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

The idea behind Cardinal Health and Stockland 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..