Correlation Between Healthcare and Youngy Health

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

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

Diversification Opportunities for Healthcare and Youngy Health

0.85

Correlation Coefficient

Healthcare  Youngy Health

Very poor diversification

The 3 months correlation between Healthcare and Youngy is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Healthcare Co and Youngy Health Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Youngy Health and Healthcare 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 Healthcare Co are associated (or correlated) with Youngy Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Youngy Health has no effect on the direction of Healthcare i.e., Healthcare and Youngy Health go up and down completely randomly.

Pair Corralation between Healthcare and Youngy Health

Assuming the 90 days trading horizon Healthcare Co is expected to under-perform the Youngy Health. But the stock apears to be less risky and, when comparing its historical volatility, Healthcare Co is 1.32 times less risky than Youngy Health. The stock trades about -0.02 of its potential returns per unit of risk. The Youngy Health Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  375.00  in Youngy Health Co on September 14, 2024 and sell it today you would earn a total of  76.00  from holding Youngy Health Co or generate 20.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.62%
Values	Daily Returns

Healthcare Co  vs.  Youngy Health Co

Healthcare

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Healthcare Co are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Healthcare sustained solid returns over the last few months and may actually be approaching a breakup point.

Youngy Health

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Youngy Health Co are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Youngy Health sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Healthcare and Youngy Health

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

The idea behind Healthcare Co and Youngy Health Co 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.