Correlation Between Microchip Technology and Hospital Mater

Can any of the company-specific risk be diversified away by investing in both Microchip Technology and Hospital Mater 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 Microchip Technology and Hospital Mater into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Microchip Technology Incorporated and Hospital Mater Dei, you can compare the effects of market volatilities on Microchip Technology and Hospital Mater 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 Microchip Technology with a short position of Hospital Mater. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microchip Technology and Hospital Mater.

Diversification Opportunities for Microchip Technology and Hospital Mater

-0.12

Correlation Coefficient

Microchip Technology  Hospital Mater

Good diversification

The 3 months correlation between Microchip and Hospital is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Microchip Technology Incorpora and Hospital Mater Dei in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hospital Mater Dei and Microchip Technology 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 Microchip Technology Incorporated are associated (or correlated) with Hospital Mater. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hospital Mater Dei has no effect on the direction of Microchip Technology i.e., Microchip Technology and Hospital Mater go up and down completely randomly.

Pair Corralation between Microchip Technology and Hospital Mater

Assuming the 90 days trading horizon Microchip Technology Incorporated is expected to generate 0.9 times more return on investment than Hospital Mater. However, Microchip Technology Incorporated is 1.11 times less risky than Hospital Mater. It trades about 0.25 of its potential returns per unit of risk. Hospital Mater Dei is currently generating about -0.01 per unit of risk. If you would invest  13,217  in Microchip Technology Incorporated on April 24, 2025 and sell it today you would earn a total of  6,649  from holding Microchip Technology Incorporated or generate 50.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Microchip Technology Incorpora  vs.  Hospital Mater Dei

Microchip Technology

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Microchip Technology Incorporated are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Microchip Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Hospital Mater Dei

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Microchip Technology and Hospital Mater

The main advantage of trading using opposite Microchip Technology and Hospital Mater positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microchip Technology position performs unexpectedly, Hospital Mater 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 Hospital Mater will offset losses from the drop in Hospital Mater's long position.

The idea behind Microchip Technology Incorporated and Hospital Mater Dei 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.