Correlation Between BII Railway and NIGHTINGALE HEALTH

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

By analyzing existing cross correlation between BII Railway Transportation and NIGHTINGALE HEALTH EO, you can compare the effects of market volatilities on BII Railway and NIGHTINGALE HEALTH 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 BII Railway with a short position of NIGHTINGALE HEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of BII Railway and NIGHTINGALE HEALTH.

Diversification Opportunities for BII Railway and NIGHTINGALE HEALTH

0.26

Correlation Coefficient

BII Railway  NIGHTINGALE HEALTH

Modest diversification

The 3 months correlation between BII and NIGHTINGALE is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding BII Railway Transportation and NIGHTINGALE HEALTH EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NIGHTINGALE HEALTH and BII Railway 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 BII Railway Transportation are associated (or correlated) with NIGHTINGALE HEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NIGHTINGALE HEALTH has no effect on the direction of BII Railway i.e., BII Railway and NIGHTINGALE HEALTH go up and down completely randomly.

Pair Corralation between BII Railway and NIGHTINGALE HEALTH

Assuming the 90 days horizon BII Railway is expected to generate 1.22 times less return on investment than NIGHTINGALE HEALTH. But when comparing it to its historical volatility, BII Railway Transportation is 1.64 times less risky than NIGHTINGALE HEALTH. It trades about 0.21 of its potential returns per unit of risk. NIGHTINGALE HEALTH EO is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  281.00  in NIGHTINGALE HEALTH EO on October 11, 2024 and sell it today you would earn a total of  19.00  from holding NIGHTINGALE HEALTH EO or generate 6.76% return on investment over 90 days.

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

BII Railway Transportation  vs.  NIGHTINGALE HEALTH EO

BII Railway Transpor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BII Railway Transportation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

NIGHTINGALE HEALTH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NIGHTINGALE HEALTH EO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, NIGHTINGALE HEALTH is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with BII Railway and NIGHTINGALE HEALTH

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

The idea behind BII Railway Transportation and NIGHTINGALE HEALTH EO 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.