Correlation Between Chernan Metal and SS Healthcare

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

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

Diversification Opportunities for Chernan Metal and SS Healthcare

0.23

Correlation Coefficient

Chernan Metal  SS Healthcare

Modest diversification

The 3 months correlation between Chernan and 4198 is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Chernan Metal Industrial and SS Healthcare Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SS Healthcare Holding and Chernan Metal 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 Chernan Metal Industrial are associated (or correlated) with SS Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SS Healthcare Holding has no effect on the direction of Chernan Metal i.e., Chernan Metal and SS Healthcare go up and down completely randomly.

Pair Corralation between Chernan Metal and SS Healthcare

Assuming the 90 days trading horizon Chernan Metal Industrial is expected to under-perform the SS Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, Chernan Metal Industrial is 1.55 times less risky than SS Healthcare. The stock trades about -0.2 of its potential returns per unit of risk. The SS Healthcare Holding is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  3,190  in SS Healthcare Holding on September 22, 2024 and sell it today you would lose (30.00) from holding SS Healthcare Holding or give up 0.94% of portfolio value over 90 days.

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

Chernan Metal Industrial  vs.  SS Healthcare Holding

Chernan Metal Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chernan Metal Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

SS Healthcare Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SS Healthcare Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, SS Healthcare is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Chernan Metal and SS Healthcare

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

The idea behind Chernan Metal Industrial and SS Healthcare Holding 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.