Correlation Between Medical Facilities and GOLDMAN SACHS

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

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

Diversification Opportunities for Medical Facilities and GOLDMAN SACHS

0.87

Correlation Coefficient

Medical Facilities  GOLDMAN SACHS

Very poor diversification

The 3 months correlation between Medical and GOLDMAN is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Medical Facilities and GOLDMAN SACHS CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GOLDMAN SACHS CDR and Medical Facilities 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 Medical Facilities are associated (or correlated) with GOLDMAN SACHS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GOLDMAN SACHS CDR has no effect on the direction of Medical Facilities i.e., Medical Facilities and GOLDMAN SACHS go up and down completely randomly.

Pair Corralation between Medical Facilities and GOLDMAN SACHS

Assuming the 90 days horizon Medical Facilities is expected to generate 1.12 times more return on investment than GOLDMAN SACHS. However, Medical Facilities is 1.12 times more volatile than GOLDMAN SACHS CDR. It trades about 0.03 of its potential returns per unit of risk. GOLDMAN SACHS CDR is currently generating about -0.14 per unit of risk. If you would invest  1,555  in Medical Facilities on September 21, 2024 and sell it today you would earn a total of  12.00  from holding Medical Facilities or generate 0.77% return on investment over 90 days.

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

Medical Facilities  vs.  GOLDMAN SACHS CDR

Medical Facilities

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Medical Facilities are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Medical Facilities displayed solid returns over the last few months and may actually be approaching a breakup point.

GOLDMAN SACHS CDR

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GOLDMAN SACHS CDR are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, GOLDMAN SACHS may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Medical Facilities and GOLDMAN SACHS

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

The idea behind Medical Facilities and GOLDMAN SACHS CDR 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.