Correlation Between American Shared and Chemed Corp
Can any of the company-specific risk be diversified away by investing in both American Shared and Chemed Corp 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 American Shared and Chemed Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Shared Hospital and Chemed Corp, you can compare the effects of market volatilities on American Shared and Chemed Corp 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 American Shared with a short position of Chemed Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Shared and Chemed Corp.
Diversification Opportunities for American Shared and Chemed Corp
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between American and Chemed is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding American Shared Hospital and Chemed Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chemed Corp and American Shared 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 American Shared Hospital are associated (or correlated) with Chemed Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chemed Corp has no effect on the direction of American Shared i.e., American Shared and Chemed Corp go up and down completely randomly.
Pair Corralation between American Shared and Chemed Corp
Considering the 90-day investment horizon American Shared Hospital is expected to generate 1.78 times more return on investment than Chemed Corp. However, American Shared is 1.78 times more volatile than Chemed Corp. It trades about 0.03 of its potential returns per unit of risk. Chemed Corp is currently generating about 0.04 per unit of risk. If you would invest 220.00 in American Shared Hospital on January 17, 2024 and sell it today you would earn a total of 67.00 from holding American Shared Hospital or generate 30.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
American Shared Hospital vs. Chemed Corp
Performance |
| Timeline |
| American Shared Hospital |
| Chemed Corp |
American Shared and Chemed Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Shared and Chemed Corp
The main advantage of trading using opposite American Shared and Chemed Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Shared position performs unexpectedly, Chemed Corp 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 Chemed Corp will offset losses from the drop in Chemed Corp's long position.| American Shared vs. Ramsay Health Care | American Shared vs. Medical Facilities | American Shared vs. Jack Nathan Medical | American Shared vs. Fresenius SE Co |
| Chemed Corp vs. Encompass Health Corp | Chemed Corp vs. Pennant Group | Chemed Corp vs. Acadia Healthcare | Chemed Corp vs. Select Medical Holdings |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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