Correlation Between Highwealth Construction and Onyx Healthcare

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

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

Diversification Opportunities for Highwealth Construction and Onyx Healthcare

-0.29

Correlation Coefficient

Highwealth Construction  Onyx Healthcare

Very good diversification

The 3 months correlation between Highwealth and Onyx is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Highwealth Construction Corp and Onyx Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Onyx Healthcare and Highwealth Construction 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 Highwealth Construction Corp are associated (or correlated) with Onyx Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Onyx Healthcare has no effect on the direction of Highwealth Construction i.e., Highwealth Construction and Onyx Healthcare go up and down completely randomly.

Pair Corralation between Highwealth Construction and Onyx Healthcare

Assuming the 90 days trading horizon Highwealth Construction is expected to generate 20.8 times less return on investment than Onyx Healthcare. But when comparing it to its historical volatility, Highwealth Construction Corp is 2.05 times less risky than Onyx Healthcare. It trades about 0.02 of its potential returns per unit of risk. Onyx Healthcare is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  14,850  in Onyx Healthcare on October 25, 2024 and sell it today you would earn a total of  1,450  from holding Onyx Healthcare or generate 9.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Highwealth Construction Corp  vs.  Onyx Healthcare

Highwealth Construction

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Highwealth Construction Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Highwealth Construction is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Onyx Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Onyx Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Onyx Healthcare is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Highwealth Construction and Onyx Healthcare

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

The idea behind Highwealth Construction Corp and Onyx Healthcare 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.