Correlation Between CM Hospitalar and Raytheon Technologies

Can any of the company-specific risk be diversified away by investing in both CM Hospitalar and Raytheon Technologies 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 Raytheon Technologies 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 Raytheon Technologies, you can compare the effects of market volatilities on CM Hospitalar and Raytheon Technologies 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 Raytheon Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of CM Hospitalar and Raytheon Technologies.

Diversification Opportunities for CM Hospitalar and Raytheon Technologies

-0.11

Correlation Coefficient

CM Hospitalar  Raytheon Technologies

Good diversification

The 3 months correlation between VVEO3 and Raytheon is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding CM Hospitalar SA and Raytheon Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raytheon Technologies 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 Raytheon Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raytheon Technologies has no effect on the direction of CM Hospitalar i.e., CM Hospitalar and Raytheon Technologies go up and down completely randomly.

Pair Corralation between CM Hospitalar and Raytheon Technologies

Assuming the 90 days trading horizon CM Hospitalar SA is expected to under-perform the Raytheon Technologies. In addition to that, CM Hospitalar is 2.09 times more volatile than Raytheon Technologies. It trades about -0.03 of its total potential returns per unit of risk. Raytheon Technologies is currently generating about 0.2 per unit of volatility. If you would invest  11,469  in Raytheon Technologies on April 24, 2025 and sell it today you would earn a total of  2,364  from holding Raytheon Technologies or generate 20.61% return on investment over 90 days.

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

CM Hospitalar SA  vs.  Raytheon Technologies

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 latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Raytheon Technologies

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Raytheon Technologies are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Raytheon Technologies sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CM Hospitalar and Raytheon Technologies

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

The idea behind CM Hospitalar SA and Raytheon Technologies 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..