Correlation Between Concord Medical and Community Health

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Can any of the company-specific risk be diversified away by investing in both Concord Medical 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 Concord Medical and Community Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Concord Medical Services and Community Health Systems, you can compare the effects of market volatilities on Concord Medical 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 Concord Medical with a short position of Community Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Concord Medical and Community Health.

Diversification Opportunities for Concord Medical and Community Health

0.5
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Concord and Community is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Concord Medical Services 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 Concord Medical 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 Concord Medical Services 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 Concord Medical i.e., Concord Medical and Community Health go up and down completely randomly.

Pair Corralation between Concord Medical and Community Health

Considering the 90-day investment horizon Concord Medical Services is expected to generate 3.28 times more return on investment than Community Health. However, Concord Medical is 3.28 times more volatile than Community Health Systems. It trades about 0.13 of its potential returns per unit of risk. Community Health Systems is currently generating about 0.26 per unit of risk. If you would invest  47.00  in Concord Medical Services on December 29, 2023 and sell it today you would earn a total of  12.00  from holding Concord Medical Services or generate 25.53% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Concord Medical Services  vs.  Community Health Systems

 Performance 
       Timeline  
Concord Medical Services 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Concord Medical Services 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 fundamental indicators remain very healthy which may send shares a bit higher in April 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.
Community Health Systems 

Risk-Adjusted Performance

4 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Community Health Systems are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, Community Health demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Concord Medical and Community Health Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Concord Medical and Community Health

The main advantage of trading using opposite Concord Medical and Community Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Concord Medical 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.
The idea behind Concord Medical Services and Community Health Systems 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..

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