Correlation Between CM Hospitalar and Annaly Capital

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

By analyzing existing cross correlation between CM Hospitalar SA and Annaly Capital Management,, you can compare the effects of market volatilities on CM Hospitalar and Annaly Capital 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 CM Hospitalar with a short position of Annaly Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of CM Hospitalar and Annaly Capital.

Diversification Opportunities for CM Hospitalar and Annaly Capital

-0.45

Correlation Coefficient

CM Hospitalar  Annaly Capital

Very good diversification

The 3 months correlation between VVEO3 and Annaly is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding CM Hospitalar SA and Annaly Capital Management, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Annaly Capital Manag and CM Hospitalar 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 CM Hospitalar SA are associated (or correlated) with Annaly Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Annaly Capital Manag has no effect on the direction of CM Hospitalar i.e., CM Hospitalar and Annaly Capital go up and down completely randomly.

Pair Corralation between CM Hospitalar and Annaly Capital

Assuming the 90 days trading horizon CM Hospitalar SA is expected to under-perform the Annaly Capital. In addition to that, CM Hospitalar is 2.6 times more volatile than Annaly Capital Management,. It trades about -0.13 of its total potential returns per unit of risk. Annaly Capital Management, is currently generating about 0.07 per unit of volatility. If you would invest  8,550  in Annaly Capital Management, on October 4, 2024 and sell it today you would earn a total of  2,777  from holding Annaly Capital Management, or generate 32.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	76.9%
Values	Daily Returns

CM Hospitalar SA  vs.  Annaly Capital Management,

CM Hospitalar SA

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CM Hospitalar SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, CM Hospitalar unveiled solid returns over the last few months and may actually be approaching a breakup point.

Annaly Capital Manag

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Annaly Capital Management, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak essential indicators, Annaly Capital may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with CM Hospitalar and Annaly Capital

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

The idea behind CM Hospitalar SA and Annaly Capital Management, 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.