Correlation Between CVS Health and Technos SA
Can any of the company-specific risk be diversified away by investing in both CVS Health and Technos SA 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 CVS Health and Technos SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVS Health and Technos SA, you can compare the effects of market volatilities on CVS Health and Technos SA 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 CVS Health with a short position of Technos SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and Technos SA.
Diversification Opportunities for CVS Health and Technos SA
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CVS and Technos is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health and Technos SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Technos SA and CVS 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 CVS Health are associated (or correlated) with Technos SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Technos SA has no effect on the direction of CVS Health i.e., CVS Health and Technos SA go up and down completely randomly.
Pair Corralation between CVS Health and Technos SA
Assuming the 90 days trading horizon CVS Health is expected to generate 1.26 times more return on investment than Technos SA. However, CVS Health is 1.26 times more volatile than Technos SA. It trades about 0.22 of its potential returns per unit of risk. Technos SA is currently generating about 0.06 per unit of risk. If you would invest 2,662 in CVS Health on December 30, 2024 and sell it today you would earn a total of 1,196 from holding CVS Health or generate 44.93% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 98.39% |
Values | Daily Returns |
CVS Health vs. Technos SA
Performance |
Timeline |
CVS Health |
Technos SA |
CVS Health and Technos SA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CVS Health and Technos SA
The main advantage of trading using opposite CVS Health and Technos SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, Technos SA 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 Technos SA will offset losses from the drop in Technos SA's long position.CVS Health vs. Metalurgica Gerdau SA | CVS Health vs. Mitsubishi UFJ Financial | CVS Health vs. Molson Coors Beverage | CVS Health vs. ICICI Bank Limited |
Technos SA vs. Truist Financial | Technos SA vs. Cincinnati Financial | Technos SA vs. Lloyds Banking Group | Technos SA vs. Metalfrio Solutions SA |
Check out your portfolio center.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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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