Correlation Between Chemed Corp and Concord Medical

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

Diversification Opportunities for Chemed Corp and Concord Medical

-0.87
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Chemed and Concord is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Chemed Corp and Concord Medical Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Concord Medical Services and Chemed Corp 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 Chemed Corp are associated (or correlated) with Concord Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Concord Medical Services has no effect on the direction of Chemed Corp i.e., Chemed Corp and Concord Medical go up and down completely randomly.

Pair Corralation between Chemed Corp and Concord Medical

Considering the 90-day investment horizon Chemed Corp is expected to generate 0.21 times more return on investment than Concord Medical. However, Chemed Corp is 4.76 times less risky than Concord Medical. It trades about 0.06 of its potential returns per unit of risk. Concord Medical Services is currently generating about -0.03 per unit of risk. If you would invest  54,127  in Chemed Corp on December 29, 2023 and sell it today you would earn a total of  10,005  from holding Chemed Corp or generate 18.48% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Chemed Corp  vs.  Concord Medical Services

 Performance 
       Timeline  
Chemed Corp 

Risk-Adjusted Performance

9 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Chemed Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical indicators, Chemed Corp may actually be approaching a critical reversion point that can send shares even higher in April 2024.
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 abnormal 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.

Chemed Corp and Concord Medical Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Chemed Corp and Concord Medical

The main advantage of trading using opposite Chemed Corp and Concord Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chemed Corp position performs unexpectedly, Concord Medical 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 Concord Medical will offset losses from the drop in Concord Medical's long position.
The idea behind Chemed Corp and Concord Medical Services 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

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