Correlation Between CM Hospitalar and Hospital Mater

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

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

Diversification Opportunities for CM Hospitalar and Hospital Mater

0.32

Correlation Coefficient

CM Hospitalar  Hospital Mater

Weak diversification

The 3 months correlation between VVEO3 and Hospital is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding CM Hospitalar SA 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 CM Hospitalar 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 CM Hospitalar SA 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 CM Hospitalar i.e., CM Hospitalar and Hospital Mater go up and down completely randomly.

Pair Corralation between CM Hospitalar and Hospital Mater

Assuming the 90 days trading horizon CM Hospitalar SA is expected to under-perform the Hospital Mater. But the stock apears to be less risky and, when comparing its historical volatility, CM Hospitalar SA is 1.44 times less risky than Hospital Mater. The stock trades about -0.1 of its potential returns per unit of risk. The Hospital Mater Dei is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  458.00  in Hospital Mater Dei on April 22, 2025 and sell it today you would lose (12.00) from holding Hospital Mater Dei or give up 2.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

CM Hospitalar SA  vs.  Hospital Mater Dei

CM Hospitalar SA

Risk-Adjusted Performance

Very Weak

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

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 CM Hospitalar and Hospital Mater

The main advantage of trading using opposite CM Hospitalar and Hospital Mater positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CM Hospitalar 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 CM Hospitalar SA 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.