Correlation Between 4Dmedical and Capitol Health

Can any of the company-specific risk be diversified away by investing in both 4Dmedical and Capitol Health 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 4Dmedical and Capitol Health into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 4Dmedical and Capitol Health, you can compare the effects of market volatilities on 4Dmedical and Capitol Health 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 4Dmedical with a short position of Capitol Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of 4Dmedical and Capitol Health.

Diversification Opportunities for 4Dmedical and Capitol Health

-0.26

Correlation Coefficient

4Dmedical  Capitol Health

Very good diversification

The 3 months correlation between 4Dmedical and Capitol is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding 4Dmedical and Capitol Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capitol Health and 4Dmedical 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 4Dmedical are associated (or correlated) with Capitol Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capitol Health has no effect on the direction of 4Dmedical i.e., 4Dmedical and Capitol Health go up and down completely randomly.

Pair Corralation between 4Dmedical and Capitol Health

Assuming the 90 days trading horizon 4Dmedical is expected to under-perform the Capitol Health. In addition to that, 4Dmedical is 1.95 times more volatile than Capitol Health. It trades about -0.12 of its total potential returns per unit of risk. Capitol Health is currently generating about 0.05 per unit of volatility. If you would invest  37.00  in Capitol Health on September 29, 2024 and sell it today you would earn a total of  2.00  from holding Capitol Health or generate 5.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

4Dmedical  vs.  Capitol Health

4Dmedical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 4Dmedical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Capitol Health

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Capitol Health are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward-looking indicators, Capitol Health may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with 4Dmedical and Capitol Health

The main advantage of trading using opposite 4Dmedical and Capitol Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 4Dmedical position performs unexpectedly, Capitol Health 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 Capitol Health will offset losses from the drop in Capitol Health's long position.

The idea behind 4Dmedical and Capitol Health 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.