Correlation Between CM Hospitalar and Ross Stores

Can any of the company-specific risk be diversified away by investing in both CM Hospitalar and Ross Stores 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 Ross Stores 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 Ross Stores, you can compare the effects of market volatilities on CM Hospitalar and Ross Stores 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 Ross Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of CM Hospitalar and Ross Stores.

Diversification Opportunities for CM Hospitalar and Ross Stores

-0.14

Correlation Coefficient

CM Hospitalar  Ross Stores

Good diversification

The 3 months correlation between VVEO3 and Ross is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding CM Hospitalar SA and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores 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 Ross Stores. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ross Stores has no effect on the direction of CM Hospitalar i.e., CM Hospitalar and Ross Stores go up and down completely randomly.

Pair Corralation between CM Hospitalar and Ross Stores

Assuming the 90 days trading horizon CM Hospitalar SA is expected to under-perform the Ross Stores. In addition to that, CM Hospitalar is 2.19 times more volatile than Ross Stores. It trades about -0.1 of its total potential returns per unit of risk. Ross Stores is currently generating about 0.06 per unit of volatility. If you would invest  29,867  in Ross Stores on September 19, 2024 and sell it today you would earn a total of  15,810  from holding Ross Stores or generate 52.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	91.38%
Values	Daily Returns

CM Hospitalar SA  vs.  Ross Stores

CM Hospitalar SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CM Hospitalar SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Ross Stores

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ross Stores are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ross Stores may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with CM Hospitalar and Ross Stores

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

The idea behind CM Hospitalar SA and Ross Stores 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.