Correlation Between HEALTHCARE REAL and REDSUN PROPERTIES

Can any of the company-specific risk be diversified away by investing in both HEALTHCARE REAL and REDSUN PROPERTIES 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 HEALTHCARE REAL and REDSUN PROPERTIES into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HEALTHCARE REAL A and REDSUN PROPERTIES GROUP, you can compare the effects of market volatilities on HEALTHCARE REAL and REDSUN PROPERTIES 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 HEALTHCARE REAL with a short position of REDSUN PROPERTIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of HEALTHCARE REAL and REDSUN PROPERTIES.

Diversification Opportunities for HEALTHCARE REAL and REDSUN PROPERTIES

-0.56

Correlation Coefficient

HEALTHCARE REAL  REDSUN PROPERTIES

Excellent diversification

The 3 months correlation between HEALTHCARE and REDSUN is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding HEALTHCARE REAL A and REDSUN PROPERTIES GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REDSUN PROPERTIES and HEALTHCARE REAL 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 HEALTHCARE REAL A are associated (or correlated) with REDSUN PROPERTIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REDSUN PROPERTIES has no effect on the direction of HEALTHCARE REAL i.e., HEALTHCARE REAL and REDSUN PROPERTIES go up and down completely randomly.

Pair Corralation between HEALTHCARE REAL and REDSUN PROPERTIES

Assuming the 90 days horizon HEALTHCARE REAL is expected to generate 30.2 times less return on investment than REDSUN PROPERTIES. But when comparing it to its historical volatility, HEALTHCARE REAL A is 17.35 times less risky than REDSUN PROPERTIES. It trades about 0.03 of its potential returns per unit of risk. REDSUN PROPERTIES GROUP is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1.00  in REDSUN PROPERTIES GROUP on September 27, 2024 and sell it today you would lose (0.70) from holding REDSUN PROPERTIES GROUP or give up 70.0% of portfolio value over 90 days.

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

HEALTHCARE REAL A  vs.  REDSUN PROPERTIES GROUP

HEALTHCARE REAL A

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HEALTHCARE REAL A are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, HEALTHCARE REAL is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

REDSUN PROPERTIES

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in REDSUN PROPERTIES GROUP are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, REDSUN PROPERTIES reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HEALTHCARE REAL and REDSUN PROPERTIES

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

The idea behind HEALTHCARE REAL A and REDSUN PROPERTIES GROUP 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.