Correlation Between Mednax and Concord Medical

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

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

Diversification Opportunities for Mednax and Concord Medical

-0.16

Correlation Coefficient

Mednax  Concord Medical

Good diversification

The 3 months correlation between Mednax and Concord is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Mednax Inc 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 Mednax 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 Mednax Inc 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 Mednax i.e., Mednax and Concord Medical go up and down completely randomly.

Pair Corralation between Mednax and Concord Medical

Allowing for the 90-day total investment horizon Mednax Inc is expected to generate 0.47 times more return on investment than Concord Medical. However, Mednax Inc is 2.15 times less risky than Concord Medical. It trades about 0.06 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  1,349  in Mednax Inc on December 27, 2024 and sell it today you would earn a total of  153.00  from holding Mednax Inc or generate 11.34% return on investment over 90 days.

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

Mednax Inc  vs.  Concord Medical Services

Mednax Inc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mednax Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Mednax exhibited solid returns over the last few months and may actually be approaching a breakup point.

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 very healthy fundamental indicators, Concord Medical is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Mednax and Concord Medical

The main advantage of trading using opposite Mednax and Concord Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mednax 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 Mednax Inc 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.