Correlation Between Community Health and Nano X

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

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

Diversification Opportunities for Community Health and Nano X

-0.43

Correlation Coefficient

Community Health  Nano X

Very good diversification

The 3 months correlation between Community and Nano is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Community Health Systems and Nano X Imaging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nano X Imaging and Community Health 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 Community Health Systems are associated (or correlated) with Nano X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nano X Imaging has no effect on the direction of Community Health i.e., Community Health and Nano X go up and down completely randomly.

Pair Corralation between Community Health and Nano X

Considering the 90-day investment horizon Community Health Systems is expected to under-perform the Nano X. But the stock apears to be less risky and, when comparing its historical volatility, Community Health Systems is 2.88 times less risky than Nano X. The stock trades about -0.24 of its potential returns per unit of risk. The Nano X Imaging is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  636.00  in Nano X Imaging on September 23, 2024 and sell it today you would earn a total of  40.00  from holding Nano X Imaging or generate 6.29% return on investment over 90 days.

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

Community Health Systems  vs.  Nano X Imaging

Community Health Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Community Health Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Nano X Imaging

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nano X Imaging are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Nano X showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Community Health and Nano X

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

The idea behind Community Health Systems and Nano X Imaging 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.