Correlation Between COMMERCIAL BANK and Singhe Hospitals

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

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

Diversification Opportunities for COMMERCIAL BANK and Singhe Hospitals

0.73

Correlation Coefficient

COMMERCIAL BANK  Singhe Hospitals

Poor diversification

The 3 months correlation between COMMERCIAL and Singhe is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding COMMERCIAL BANK OF and Singhe Hospitals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singhe Hospitals and COMMERCIAL BANK 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 COMMERCIAL BANK OF are associated (or correlated) with Singhe Hospitals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singhe Hospitals has no effect on the direction of COMMERCIAL BANK i.e., COMMERCIAL BANK and Singhe Hospitals go up and down completely randomly.

Pair Corralation between COMMERCIAL BANK and Singhe Hospitals

Assuming the 90 days trading horizon COMMERCIAL BANK OF is expected to generate 0.4 times more return on investment than Singhe Hospitals. However, COMMERCIAL BANK OF is 2.51 times less risky than Singhe Hospitals. It trades about 0.48 of its potential returns per unit of risk. Singhe Hospitals is currently generating about 0.07 per unit of risk. If you would invest  8,880  in COMMERCIAL BANK OF on October 27, 2024 and sell it today you would earn a total of  4,120  from holding COMMERCIAL BANK OF or generate 46.4% return on investment over 90 days.

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

COMMERCIAL BANK OF  vs.  Singhe Hospitals

COMMERCIAL BANK

Risk-Adjusted Performance

37 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in COMMERCIAL BANK OF are ranked lower than 37 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, COMMERCIAL BANK sustained solid returns over the last few months and may actually be approaching a breakup point.

Singhe Hospitals

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Singhe Hospitals are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Singhe Hospitals sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with COMMERCIAL BANK and Singhe Hospitals

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

The idea behind COMMERCIAL BANK OF and Singhe Hospitals 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.