Correlation Between Molina Healthcare and Check Cap

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

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

Diversification Opportunities for Molina Healthcare and Check Cap

-0.23

Correlation Coefficient

Molina Healthcare  Check Cap

Very good diversification

The 3 months correlation between Molina and Check is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Molina Healthcare and Check Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Check Cap and Molina 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 Molina Healthcare are associated (or correlated) with Check Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Check Cap has no effect on the direction of Molina Healthcare i.e., Molina Healthcare and Check Cap go up and down completely randomly.

Pair Corralation between Molina Healthcare and Check Cap

Considering the 90-day investment horizon Molina Healthcare is expected to generate 0.25 times more return on investment than Check Cap. However, Molina Healthcare is 3.92 times less risky than Check Cap. It trades about 0.08 of its potential returns per unit of risk. Check Cap is currently generating about 0.0 per unit of risk. If you would invest  28,938  in Molina Healthcare on December 28, 2024 and sell it today you would earn a total of  3,409  from holding Molina Healthcare or generate 11.78% return on investment over 90 days.

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

Molina Healthcare  vs.  Check Cap

Molina Healthcare

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Molina Healthcare are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, Molina Healthcare demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Check Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Check Cap has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Check Cap is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Molina Healthcare and Check Cap

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

The idea behind Molina Healthcare and Check Cap 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.