Correlation Between Chemed Corp and Capital Senior

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

Diversification Opportunities for Chemed Corp and Capital Senior

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Chemed and Capital is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Chemed Corp and Capital Senior Living in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Senior Living 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 Capital Senior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Senior Living has no effect on the direction of Chemed Corp i.e., Chemed Corp and Capital Senior go up and down completely randomly.

Pair Corralation between Chemed Corp and Capital Senior

If you would invest  59,660  in Chemed Corp on December 29, 2023 and sell it today you would earn a total of  4,472  from holding Chemed Corp or generate 7.5% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Chemed Corp  vs.  Capital Senior Living

 Performance 
       Timeline  
Chemed Corp 

Risk-Adjusted Performance

10 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Chemed Corp are ranked lower than 10 (%) 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.
Capital Senior Living 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Capital Senior Living has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Capital Senior is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Chemed Corp and Capital Senior Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Chemed Corp and Capital Senior

The main advantage of trading using opposite Chemed Corp and Capital Senior positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chemed Corp position performs unexpectedly, Capital Senior 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 Capital Senior will offset losses from the drop in Capital Senior's long position.
The idea behind Chemed Corp and Capital Senior Living 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.

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