Correlation Between ASOS PLC and CVS Health
Can any of the company-specific risk be diversified away by investing in both ASOS PLC and CVS Health 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 ASOS PLC and CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ASOS PLC and CVS Health Corp, you can compare the effects of market volatilities on ASOS PLC and CVS Health 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 ASOS PLC with a short position of CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASOS PLC and CVS Health.
Diversification Opportunities for ASOS PLC and CVS Health
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between ASOS and CVS is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding ASOS PLC and CVS Health Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health Corp and ASOS PLC 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 ASOS PLC are associated (or correlated) with CVS Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVS Health Corp has no effect on the direction of ASOS PLC i.e., ASOS PLC and CVS Health go up and down completely randomly.
Pair Corralation between ASOS PLC and CVS Health
Assuming the 90 days trading horizon ASOS PLC is expected to generate 2.11 times more return on investment than CVS Health. However, ASOS PLC is 2.11 times more volatile than CVS Health Corp. It trades about 0.05 of its potential returns per unit of risk. CVS Health Corp is currently generating about -0.32 per unit of risk. If you would invest 398.00 in ASOS PLC on January 20, 2024 and sell it today you would earn a total of 11.00 from holding ASOS PLC or generate 2.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ASOS PLC vs. CVS Health Corp
Performance |
| Timeline |
| ASOS PLC |
| CVS Health Corp |
ASOS PLC and CVS Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASOS PLC and CVS Health
The main advantage of trading using opposite ASOS PLC and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASOS PLC position performs unexpectedly, CVS Health 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 CVS Health will offset losses from the drop in CVS Health's long position.| ASOS PLC vs. Benchmark Electronics | ASOS PLC vs. X FAB Silicon Foundries | ASOS PLC vs. REC SILICON | ASOS PLC vs. Renesas Electronics |
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Check out your portfolio center.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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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