Correlation Between CVS Health and Sabien Technology

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

By analyzing existing cross correlation between CVS Health Corp and Sabien Technology Group, you can compare the effects of market volatilities on CVS Health and Sabien Technology 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 CVS Health with a short position of Sabien Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and Sabien Technology.

Diversification Opportunities for CVS Health and Sabien Technology

0.39

Correlation Coefficient

CVS Health  Sabien Technology

Weak diversification

The 3 months correlation between CVS and Sabien is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health Corp and Sabien Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabien Technology and CVS Health 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 CVS Health Corp are associated (or correlated) with Sabien Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabien Technology has no effect on the direction of CVS Health i.e., CVS Health and Sabien Technology go up and down completely randomly.

Pair Corralation between CVS Health and Sabien Technology

Assuming the 90 days trading horizon CVS Health Corp is expected to under-perform the Sabien Technology. But the stock apears to be less risky and, when comparing its historical volatility, CVS Health Corp is 1.49 times less risky than Sabien Technology. The stock trades about -0.04 of its potential returns per unit of risk. The Sabien Technology Group is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  750.00  in Sabien Technology Group on September 13, 2024 and sell it today you would earn a total of  350.00  from holding Sabien Technology Group or generate 46.67% return on investment over 90 days.

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

CVS Health Corp  vs.  Sabien Technology Group

CVS Health Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Sabien Technology

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sabien Technology Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Sabien Technology exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CVS Health and Sabien Technology

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

The idea behind CVS Health Corp and Sabien Technology 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.