Correlation Between Prosafe SE and CARDINAL HEALTH

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

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

Diversification Opportunities for Prosafe SE and CARDINAL HEALTH

-0.86

Correlation Coefficient

Prosafe SE  CARDINAL HEALTH

Pay attention - limited upside

The 3 months correlation between Prosafe and CARDINAL is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Prosafe SE and CARDINAL HEALTH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CARDINAL HEALTH and Prosafe SE 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 Prosafe SE are associated (or correlated) with CARDINAL HEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CARDINAL HEALTH has no effect on the direction of Prosafe SE i.e., Prosafe SE and CARDINAL HEALTH go up and down completely randomly.

Pair Corralation between Prosafe SE and CARDINAL HEALTH

Assuming the 90 days horizon Prosafe SE is expected to under-perform the CARDINAL HEALTH. In addition to that, Prosafe SE is 4.06 times more volatile than CARDINAL HEALTH. It trades about -0.09 of its total potential returns per unit of risk. CARDINAL HEALTH is currently generating about 0.09 per unit of volatility. If you would invest  6,802  in CARDINAL HEALTH on October 4, 2024 and sell it today you would earn a total of  4,608  from holding CARDINAL HEALTH or generate 67.74% return on investment over 90 days.

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

Prosafe SE  vs.  CARDINAL HEALTH

Prosafe SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prosafe SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

CARDINAL HEALTH

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CARDINAL HEALTH are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical indicators, CARDINAL HEALTH unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Prosafe SE and CARDINAL HEALTH

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

The idea behind Prosafe SE and CARDINAL HEALTH 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.