Correlation Between Vodafone Group and Hospital Mater

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

By analyzing existing cross correlation between Vodafone Group Public and Hospital Mater Dei, you can compare the effects of market volatilities on Vodafone Group and Hospital Mater 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 Vodafone Group with a short position of Hospital Mater. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vodafone Group and Hospital Mater.

Diversification Opportunities for Vodafone Group and Hospital Mater

-0.18

Correlation Coefficient

Vodafone Group  Hospital Mater

Good diversification

The 3 months correlation between Vodafone and Hospital is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Vodafone Group Public and Hospital Mater Dei in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hospital Mater Dei and Vodafone Group 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 Vodafone Group Public are associated (or correlated) with Hospital Mater. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hospital Mater Dei has no effect on the direction of Vodafone Group i.e., Vodafone Group and Hospital Mater go up and down completely randomly.

Pair Corralation between Vodafone Group and Hospital Mater

Assuming the 90 days trading horizon Vodafone Group is expected to generate 2.43 times less return on investment than Hospital Mater. But when comparing it to its historical volatility, Vodafone Group Public is 1.79 times less risky than Hospital Mater. It trades about 0.05 of its potential returns per unit of risk. Hospital Mater Dei is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  364.00  in Hospital Mater Dei on December 30, 2024 and sell it today you would earn a total of  44.00  from holding Hospital Mater Dei or generate 12.09% return on investment over 90 days.

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

Vodafone Group Public  vs.  Hospital Mater Dei

Vodafone Group Public

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vodafone Group Public are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Vodafone Group may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Hospital Mater Dei

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hospital Mater Dei are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Hospital Mater unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vodafone Group and Hospital Mater

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

The idea behind Vodafone Group Public and Hospital Mater Dei 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.