Correlation Between NATIONAL HEALTHCARE and SPORTING

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

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

Diversification Opportunities for NATIONAL HEALTHCARE and SPORTING

0.72

Correlation Coefficient

NATIONAL HEALTHCARE  SPORTING

Poor diversification

The 3 months correlation between NATIONAL and SPORTING is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding NATIONAL HEALTHCARE and SPORTING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPORTING and NATIONAL HEALTHCARE 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 NATIONAL HEALTHCARE are associated (or correlated) with SPORTING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPORTING has no effect on the direction of NATIONAL HEALTHCARE i.e., NATIONAL HEALTHCARE and SPORTING go up and down completely randomly.

Pair Corralation between NATIONAL HEALTHCARE and SPORTING

Assuming the 90 days trading horizon NATIONAL HEALTHCARE is expected to generate 0.57 times more return on investment than SPORTING. However, NATIONAL HEALTHCARE is 1.75 times less risky than SPORTING. It trades about -0.09 of its potential returns per unit of risk. SPORTING is currently generating about -0.09 per unit of risk. If you would invest  10,937  in NATIONAL HEALTHCARE on October 24, 2024 and sell it today you would lose (1,287) from holding NATIONAL HEALTHCARE or give up 11.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.33%
Values	Daily Returns

NATIONAL HEALTHCARE  vs.  SPORTING

NATIONAL HEALTHCARE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NATIONAL HEALTHCARE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

SPORTING

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPORTING 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 and fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with NATIONAL HEALTHCARE and SPORTING

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

The idea behind NATIONAL HEALTHCARE and SPORTING 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.