Correlation Between Hospital Mater and Rede DOr

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

By analyzing existing cross correlation between Hospital Mater Dei and Rede DOr So, you can compare the effects of market volatilities on Hospital Mater and Rede DOr 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 Hospital Mater with a short position of Rede DOr. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hospital Mater and Rede DOr.

Diversification Opportunities for Hospital Mater and Rede DOr

0.9

Correlation Coefficient

Hospital Mater  Rede DOr

Almost no diversification

The 3 months correlation between Hospital and Rede is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Hospital Mater Dei and Rede DOr So in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rede DOr So and Hospital Mater 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 Hospital Mater Dei are associated (or correlated) with Rede DOr. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rede DOr So has no effect on the direction of Hospital Mater i.e., Hospital Mater and Rede DOr go up and down completely randomly.

Pair Corralation between Hospital Mater and Rede DOr

Assuming the 90 days trading horizon Hospital Mater Dei is expected to under-perform the Rede DOr. In addition to that, Hospital Mater is 1.46 times more volatile than Rede DOr So. It trades about -0.16 of its total potential returns per unit of risk. Rede DOr So is currently generating about -0.18 per unit of volatility. If you would invest  3,013  in Rede DOr So on October 7, 2024 and sell it today you would lose (498.00) from holding Rede DOr So or give up 16.53% of portfolio value over 90 days.

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

Hospital Mater Dei  vs.  Rede DOr So

Hospital Mater Dei

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hospital Mater Dei has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic 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.

Rede DOr So

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rede DOr So 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 basic 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 Hospital Mater and Rede DOr

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

The idea behind Hospital Mater Dei and Rede DOr So 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.