Correlation Between NATIONAL HEALTHCARE and Yamaha

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

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

Diversification Opportunities for NATIONAL HEALTHCARE and Yamaha

-0.46

Correlation Coefficient

NATIONAL HEALTHCARE  Yamaha

Very good diversification

The 3 months correlation between NATIONAL and Yamaha is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding NATIONAL HEALTHCARE and Yamaha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yamaha 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 Yamaha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yamaha has no effect on the direction of NATIONAL HEALTHCARE i.e., NATIONAL HEALTHCARE and Yamaha go up and down completely randomly.

Pair Corralation between NATIONAL HEALTHCARE and Yamaha

Assuming the 90 days trading horizon NATIONAL HEALTHCARE is expected to generate 0.81 times more return on investment than Yamaha. However, NATIONAL HEALTHCARE is 1.24 times less risky than Yamaha. It trades about 0.04 of its potential returns per unit of risk. Yamaha is currently generating about 0.0 per unit of risk. If you would invest  8,442  in NATIONAL HEALTHCARE on October 9, 2024 and sell it today you would earn a total of  1,458  from holding NATIONAL HEALTHCARE or generate 17.27% return on investment over 90 days.

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

NATIONAL HEALTHCARE  vs.  Yamaha

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 rather sound basic indicators, NATIONAL HEALTHCARE is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Yamaha

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yamaha has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with NATIONAL HEALTHCARE and Yamaha

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

The idea behind NATIONAL HEALTHCARE and Yamaha 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.