Correlation Between American Shared and Community Health
Can any of the company-specific risk be diversified away by investing in both American Shared and Community 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 American Shared and Community Health 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 Community Health Systems, you can compare the effects of market volatilities on American Shared and Community 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 American Shared with a short position of Community Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Shared and Community Health.
Diversification Opportunities for American Shared and Community Health
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Community is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding American Shared Hospital and Community Health Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Community Health Systems 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 Community Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Community Health Systems has no effect on the direction of American Shared i.e., American Shared and Community Health go up and down completely randomly.
Pair Corralation between American Shared and Community Health
Considering the 90-day investment horizon American Shared Hospital is expected to generate 0.91 times more return on investment than Community Health. However, American Shared Hospital is 1.1 times less risky than Community Health. It trades about 0.28 of its potential returns per unit of risk. Community Health Systems is currently generating about -0.18 per unit of risk. If you would invest 259.00 in American Shared Hospital on January 25, 2024 and sell it today you would earn a total of 41.00 from holding American Shared Hospital or generate 15.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Shared Hospital vs. Community Health Systems
Performance |
| Timeline |
| American Shared Hospital |
| Community Health Systems |
American Shared and Community Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Shared and Community Health
The main advantage of trading using opposite American Shared and Community Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Shared position performs unexpectedly, Community 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 Community Health will offset losses from the drop in Community Health'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 |
| Community Health vs. Universal Health Services | Community Health vs. HCA Holdings | Community Health vs. Surgery Partners | Community Health vs. Acadia Healthcare |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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