Correlation Between CareMax and Alcon AG

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

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

Diversification Opportunities for CareMax and Alcon AG

0.8

Correlation Coefficient

CareMax  Alcon AG

Very poor diversification

The 3 months correlation between CareMax and Alcon is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding CareMax and Alcon AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alcon AG and CareMax 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 CareMax are associated (or correlated) with Alcon AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alcon AG has no effect on the direction of CareMax i.e., CareMax and Alcon AG go up and down completely randomly.

Pair Corralation between CareMax and Alcon AG

Given the investment horizon of 90 days CareMax is expected to under-perform the Alcon AG. In addition to that, CareMax is 24.17 times more volatile than Alcon AG. It trades about -0.11 of its total potential returns per unit of risk. Alcon AG is currently generating about -0.18 per unit of volatility. If you would invest  9,543  in Alcon AG on October 7, 2024 and sell it today you would lose (1,137) from holding Alcon AG or give up 11.91% of portfolio value over 90 days.

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

CareMax  vs.  Alcon AG

CareMax

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CareMax has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Alcon AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alcon AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's essential indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with CareMax and Alcon AG

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

The idea behind CareMax and Alcon AG 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.