Correlation Between Healthcare Global and VIP Clothing

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

By analyzing existing cross correlation between Healthcare Global Enterprises and VIP Clothing Limited, you can compare the effects of market volatilities on Healthcare Global and VIP Clothing 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 Healthcare Global with a short position of VIP Clothing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Healthcare Global and VIP Clothing.

Diversification Opportunities for Healthcare Global and VIP Clothing

-0.21

Correlation Coefficient

Healthcare Global  VIP Clothing

Very good diversification

The 3 months correlation between Healthcare and VIP is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Healthcare Global Enterprises and VIP Clothing Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VIP Clothing Limited and Healthcare Global 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 Healthcare Global Enterprises are associated (or correlated) with VIP Clothing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VIP Clothing Limited has no effect on the direction of Healthcare Global i.e., Healthcare Global and VIP Clothing go up and down completely randomly.

Pair Corralation between Healthcare Global and VIP Clothing

Assuming the 90 days trading horizon Healthcare Global Enterprises is expected to generate 0.63 times more return on investment than VIP Clothing. However, Healthcare Global Enterprises is 1.58 times less risky than VIP Clothing. It trades about 0.1 of its potential returns per unit of risk. VIP Clothing Limited is currently generating about -0.22 per unit of risk. If you would invest  47,235  in Healthcare Global Enterprises on December 26, 2024 and sell it today you would earn a total of  5,620  from holding Healthcare Global Enterprises or generate 11.9% return on investment over 90 days.

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

Healthcare Global Enterprises  vs.  VIP Clothing Limited

Healthcare Global

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Healthcare Global Enterprises are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Healthcare Global exhibited solid returns over the last few months and may actually be approaching a breakup point.

VIP Clothing Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days VIP Clothing Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Healthcare Global and VIP Clothing

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

The idea behind Healthcare Global Enterprises and VIP Clothing Limited 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..