Correlation Between Pacific Hospital and De Licacy

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

By analyzing existing cross correlation between Pacific Hospital Supply and De Licacy Industrial, you can compare the effects of market volatilities on Pacific Hospital and De Licacy 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 Pacific Hospital with a short position of De Licacy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacific Hospital and De Licacy.

Diversification Opportunities for Pacific Hospital and De Licacy

0.34

Correlation Coefficient

Pacific Hospital  De Licacy

Weak diversification

The 3 months correlation between Pacific and 1464 is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Hospital Supply and De Licacy Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on De Licacy Industrial and Pacific Hospital 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 Pacific Hospital Supply are associated (or correlated) with De Licacy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of De Licacy Industrial has no effect on the direction of Pacific Hospital i.e., Pacific Hospital and De Licacy go up and down completely randomly.

Pair Corralation between Pacific Hospital and De Licacy

Assuming the 90 days trading horizon Pacific Hospital is expected to generate 4.33 times less return on investment than De Licacy. But when comparing it to its historical volatility, Pacific Hospital Supply is 4.09 times less risky than De Licacy. It trades about 0.08 of its potential returns per unit of risk. De Licacy Industrial is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,435  in De Licacy Industrial on September 15, 2024 and sell it today you would earn a total of  160.00  from holding De Licacy Industrial or generate 11.15% return on investment over 90 days.

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

Pacific Hospital Supply  vs.  De Licacy Industrial

Pacific Hospital Supply

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pacific Hospital Supply are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Pacific Hospital is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

De Licacy Industrial

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in De Licacy Industrial are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, De Licacy may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Pacific Hospital and De Licacy

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

The idea behind Pacific Hospital Supply and De Licacy Industrial 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.