Correlation Between Medical Facilities and Saville Resources

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

By analyzing existing cross correlation between Medical Facilities and Saville Resources, you can compare the effects of market volatilities on Medical Facilities and Saville Resources 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 Saville Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medical Facilities and Saville Resources.

Diversification Opportunities for Medical Facilities and Saville Resources

0.13

Correlation Coefficient

Medical Facilities  Saville Resources

Average diversification

The 3 months correlation between Medical and Saville is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Medical Facilities and Saville Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saville Resources 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 Saville Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saville Resources has no effect on the direction of Medical Facilities i.e., Medical Facilities and Saville Resources go up and down completely randomly.

Pair Corralation between Medical Facilities and Saville Resources

Assuming the 90 days horizon Medical Facilities is expected to under-perform the Saville Resources. But the stock apears to be less risky and, when comparing its historical volatility, Medical Facilities is 6.78 times less risky than Saville Resources. The stock trades about -0.02 of its potential returns per unit of risk. The Saville Resources is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  37.00  in Saville Resources on October 10, 2024 and sell it today you would earn a total of  9.00  from holding Saville Resources or generate 24.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Medical Facilities  vs.  Saville Resources

Medical Facilities

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Medical Facilities are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Medical Facilities may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Saville Resources

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Saville Resources are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Saville Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Medical Facilities and Saville Resources

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

The idea behind Medical Facilities and Saville Resources 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..