Correlation Between CVR Energy and Induction Healthcare

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

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

Diversification Opportunities for CVR Energy and Induction Healthcare

-0.81

Correlation Coefficient

CVR Energy  Induction Healthcare

Pay attention - limited upside

The 3 months correlation between CVR and Induction is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding CVR Energy and Induction Healthcare Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Induction Healthcare and CVR Energy 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 CVR Energy are associated (or correlated) with Induction Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Induction Healthcare has no effect on the direction of CVR Energy i.e., CVR Energy and Induction Healthcare go up and down completely randomly.

Pair Corralation between CVR Energy and Induction Healthcare

Assuming the 90 days trading horizon CVR Energy is expected to generate 1.62 times more return on investment than Induction Healthcare. However, CVR Energy is 1.62 times more volatile than Induction Healthcare Group. It trades about 0.03 of its potential returns per unit of risk. Induction Healthcare Group is currently generating about 0.01 per unit of risk. If you would invest  1,852  in CVR Energy on October 6, 2024 and sell it today you would earn a total of  18.00  from holding CVR Energy or generate 0.97% return on investment over 90 days.

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

CVR Energy  vs.  Induction Healthcare Group

CVR Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CVR Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Induction Healthcare

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Induction Healthcare Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Induction Healthcare unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CVR Energy and Induction Healthcare

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

The idea behind CVR Energy and Induction Healthcare Group 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.

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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.