Correlation Between ModivCare and Concord Medical

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

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

Diversification Opportunities for ModivCare and Concord Medical

0.57

Correlation Coefficient

ModivCare  Concord Medical

Very weak diversification

The 3 months correlation between ModivCare and Concord is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding ModivCare and Concord Medical Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Concord Medical Services and ModivCare 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 ModivCare are associated (or correlated) with Concord Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Concord Medical Services has no effect on the direction of ModivCare i.e., ModivCare and Concord Medical go up and down completely randomly.

Pair Corralation between ModivCare and Concord Medical

Given the investment horizon of 90 days ModivCare is expected to under-perform the Concord Medical. But the stock apears to be less risky and, when comparing its historical volatility, ModivCare is 2.77 times less risky than Concord Medical. The stock trades about -0.07 of its potential returns per unit of risk. The Concord Medical Services is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  60.00  in Concord Medical Services on February 3, 2024 and sell it today you would earn a total of  10.00  from holding Concord Medical Services or generate 16.67% return on investment over 90 days.

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

ModivCare  vs.  Concord Medical Services

ModivCare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ModivCare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental indicators remain fairly stable which may send shares a bit higher in June 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Concord Medical Services

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Concord Medical Services are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Concord Medical displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ModivCare and Concord Medical

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

The idea behind ModivCare and Concord Medical Services 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.