Correlation Between Excelsior Medical and Chailease Holding

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

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

Diversification Opportunities for Excelsior Medical and Chailease Holding

0.65

Correlation Coefficient

Excelsior Medical  Chailease Holding

Poor diversification

The 3 months correlation between Excelsior and Chailease is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Excelsior Medical Co and Chailease Holding Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chailease Holding and Excelsior Medical 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 Excelsior Medical Co are associated (or correlated) with Chailease Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chailease Holding has no effect on the direction of Excelsior Medical i.e., Excelsior Medical and Chailease Holding go up and down completely randomly.

Pair Corralation between Excelsior Medical and Chailease Holding

Assuming the 90 days trading horizon Excelsior Medical Co is expected to generate 0.15 times more return on investment than Chailease Holding. However, Excelsior Medical Co is 6.7 times less risky than Chailease Holding. It trades about -0.07 of its potential returns per unit of risk. Chailease Holding Co is currently generating about -0.11 per unit of risk. If you would invest  8,810  in Excelsior Medical Co on September 3, 2024 and sell it today you would lose (150.00) from holding Excelsior Medical Co or give up 1.7% of portfolio value over 90 days.

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

Excelsior Medical Co  vs.  Chailease Holding Co

Excelsior Medical

Risk-Adjusted Performance

0 of 100

Very Weak

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

Chailease Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chailease Holding Co 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.

Pair Trading with Excelsior Medical and Chailease Holding

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

The idea behind Excelsior Medical Co and Chailease Holding Co 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.