Correlation Between Regis Healthcare and Austco Healthcare

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

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

Diversification Opportunities for Regis Healthcare and Austco Healthcare

0.72

Correlation Coefficient

Regis Healthcare  Austco Healthcare

Poor diversification

The 3 months correlation between Regis and Austco is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Regis Healthcare and Austco Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Austco Healthcare and Regis 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 Regis Healthcare are associated (or correlated) with Austco Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Austco Healthcare has no effect on the direction of Regis Healthcare i.e., Regis Healthcare and Austco Healthcare go up and down completely randomly.

Pair Corralation between Regis Healthcare and Austco Healthcare

Assuming the 90 days trading horizon Regis Healthcare is expected to generate 0.58 times more return on investment than Austco Healthcare. However, Regis Healthcare is 1.72 times less risky than Austco Healthcare. It trades about 0.2 of its potential returns per unit of risk. Austco Healthcare is currently generating about 0.08 per unit of risk. If you would invest  534.00  in Regis Healthcare on September 3, 2024 and sell it today you would earn a total of  134.00  from holding Regis Healthcare or generate 25.09% return on investment over 90 days.

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

Regis Healthcare  vs.  Austco Healthcare

Regis Healthcare

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Regis Healthcare are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Regis Healthcare unveiled solid returns over the last few months and may actually be approaching a breakup point.

Austco Healthcare

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Austco Healthcare are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, Austco Healthcare unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Regis Healthcare and Austco Healthcare

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

The idea behind Regis Healthcare and Austco Healthcare 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.