Correlation Between COMPUTERSHARE and NATIONAL HEALTHCARE

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

By analyzing existing cross correlation between COMPUTERSHARE and NATIONAL HEALTHCARE, you can compare the effects of market volatilities on COMPUTERSHARE and NATIONAL HEALTHCARE 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 COMPUTERSHARE with a short position of NATIONAL HEALTHCARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of COMPUTERSHARE and NATIONAL HEALTHCARE.

Diversification Opportunities for COMPUTERSHARE and NATIONAL HEALTHCARE

0.42

Correlation Coefficient

COMPUTERSHARE  NATIONAL HEALTHCARE

Very weak diversification

The 3 months correlation between COMPUTERSHARE and NATIONAL is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding COMPUTERSHARE and NATIONAL HEALTHCARE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NATIONAL HEALTHCARE and COMPUTERSHARE 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 COMPUTERSHARE are associated (or correlated) with NATIONAL HEALTHCARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NATIONAL HEALTHCARE has no effect on the direction of COMPUTERSHARE i.e., COMPUTERSHARE and NATIONAL HEALTHCARE go up and down completely randomly.

Pair Corralation between COMPUTERSHARE and NATIONAL HEALTHCARE

Assuming the 90 days trading horizon COMPUTERSHARE is expected to generate 1.43 times less return on investment than NATIONAL HEALTHCARE. But when comparing it to its historical volatility, COMPUTERSHARE is 1.05 times less risky than NATIONAL HEALTHCARE. It trades about 0.1 of its potential returns per unit of risk. NATIONAL HEALTHCARE is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  7,754  in NATIONAL HEALTHCARE on April 22, 2025 and sell it today you would earn a total of  1,046  from holding NATIONAL HEALTHCARE or generate 13.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.31%
Values	Daily Returns

COMPUTERSHARE  vs.  NATIONAL HEALTHCARE

COMPUTERSHARE

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in COMPUTERSHARE are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical indicators, COMPUTERSHARE may actually be approaching a critical reversion point that can send shares even higher in August 2025.

NATIONAL HEALTHCARE

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NATIONAL HEALTHCARE are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, NATIONAL HEALTHCARE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with COMPUTERSHARE and NATIONAL HEALTHCARE

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

The idea behind COMPUTERSHARE and NATIONAL HEALTHCARE 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.