Correlation Between Pacific Health and Saker Aviation

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

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

Diversification Opportunities for Pacific Health and Saker Aviation

0.52

Correlation Coefficient

Pacific Health  Saker Aviation

Very weak diversification

The 3 months correlation between Pacific and Saker is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Health Care and Saker Aviation Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saker Aviation Services and Pacific 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 Pacific Health Care are associated (or correlated) with Saker Aviation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saker Aviation Services has no effect on the direction of Pacific Health i.e., Pacific Health and Saker Aviation go up and down completely randomly.

Pair Corralation between Pacific Health and Saker Aviation

Given the investment horizon of 90 days Pacific Health Care is expected to generate 1.77 times more return on investment than Saker Aviation. However, Pacific Health is 1.77 times more volatile than Saker Aviation Services. It trades about 0.0 of its potential returns per unit of risk. Saker Aviation Services is currently generating about -0.06 per unit of risk. If you would invest  78.00  in Pacific Health Care on October 11, 2024 and sell it today you would lose (1.00) from holding Pacific Health Care or give up 1.28% of portfolio value over 90 days.

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

Pacific Health Care  vs.  Saker Aviation Services

Pacific Health Care

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pacific Health Care has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's technical indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Saker Aviation Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Saker Aviation Services 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.

Pair Trading with Pacific Health and Saker Aviation

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

The idea behind Pacific Health Care and Saker Aviation 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.