Correlation Between Ensign and Concord Medical

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

By analyzing existing cross correlation between The Ensign Group and Concord Medical Services, you can compare the effects of market volatilities on Ensign and Concord Medical 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 Ensign with a short position of Concord Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ensign and Concord Medical.

Diversification Opportunities for Ensign and Concord Medical

0.19

Correlation Coefficient

Ensign  Concord Medical

Average diversification

The 3 months correlation between Ensign and Concord is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding The Ensign Group and Concord Medical Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Concord Medical Services and Ensign 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 The Ensign Group are associated (or correlated) with Concord Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Concord Medical Services has no effect on the direction of Ensign i.e., Ensign and Concord Medical go up and down completely randomly.

Pair Corralation between Ensign and Concord Medical

Given the investment horizon of 90 days The Ensign Group is expected to generate 0.25 times more return on investment than Concord Medical. However, The Ensign Group is 3.95 times less risky than Concord Medical. It trades about -0.02 of its potential returns per unit of risk. Concord Medical Services is currently generating about -0.01 per unit of risk. If you would invest  13,272  in The Ensign Group on December 28, 2024 and sell it today you would lose (398.00) from holding The Ensign Group or give up 3.0% of portfolio value over 90 days.

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

The Ensign Group  vs.  Concord Medical Services

Ensign Group

Risk-Adjusted Performance

Very Weak

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

Concord Medical Services

Risk-Adjusted Performance

Very Weak

Over the last 90 days Concord Medical Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Ensign and Concord Medical

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

The idea behind The Ensign Group and Concord Medical Services 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.