Correlation Between Medplus Health and Oriental Hotels

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

By analyzing existing cross correlation between Medplus Health Services and Oriental Hotels Limited, you can compare the effects of market volatilities on Medplus Health and Oriental Hotels 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 Medplus Health with a short position of Oriental Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medplus Health and Oriental Hotels.

Diversification Opportunities for Medplus Health and Oriental Hotels

0.77

Correlation Coefficient

Medplus Health  Oriental Hotels

Poor diversification

The 3 months correlation between Medplus and Oriental is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Medplus Health Services and Oriental Hotels Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oriental Hotels and Medplus Health 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 Medplus Health Services are associated (or correlated) with Oriental Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oriental Hotels has no effect on the direction of Medplus Health i.e., Medplus Health and Oriental Hotels go up and down completely randomly.

Pair Corralation between Medplus Health and Oriental Hotels

Assuming the 90 days trading horizon Medplus Health Services is expected to generate 0.68 times more return on investment than Oriental Hotels. However, Medplus Health Services is 1.48 times less risky than Oriental Hotels. It trades about -0.1 of its potential returns per unit of risk. Oriental Hotels Limited is currently generating about -0.09 per unit of risk. If you would invest  84,110  in Medplus Health Services on December 27, 2024 and sell it today you would lose (10,550) from holding Medplus Health Services or give up 12.54% of portfolio value over 90 days.

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

Medplus Health Services  vs.  Oriental Hotels Limited

Medplus Health Services

Risk-Adjusted Performance

Very Weak

Over the last 90 days Medplus Health Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's essential indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Oriental Hotels

Risk-Adjusted Performance

Very Weak

Over the last 90 days Oriental Hotels Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Medplus Health and Oriental Hotels

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

The idea behind Medplus Health Services and Oriental Hotels 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.