Correlation Between Goodwill E and Humanwell Healthcare

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

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

Diversification Opportunities for Goodwill E and Humanwell Healthcare

0.53

Correlation Coefficient

Goodwill E  Humanwell Healthcare

Very weak diversification

The 3 months correlation between Goodwill and Humanwell is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Goodwill E Health and Humanwell Healthcare Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Humanwell Healthcare and Goodwill E 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 Goodwill E Health are associated (or correlated) with Humanwell Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Humanwell Healthcare has no effect on the direction of Goodwill E i.e., Goodwill E and Humanwell Healthcare go up and down completely randomly.

Pair Corralation between Goodwill E and Humanwell Healthcare

Assuming the 90 days trading horizon Goodwill E Health is expected to under-perform the Humanwell Healthcare. In addition to that, Goodwill E is 2.01 times more volatile than Humanwell Healthcare Group. It trades about -0.01 of its total potential returns per unit of risk. Humanwell Healthcare Group is currently generating about 0.0 per unit of volatility. If you would invest  2,253  in Humanwell Healthcare Group on October 8, 2024 and sell it today you would lose (25.00) from holding Humanwell Healthcare Group or give up 1.11% of portfolio value over 90 days.

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

Goodwill E Health  vs.  Humanwell Healthcare Group

Goodwill E Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goodwill E Health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Goodwill E is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Humanwell Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Humanwell Healthcare Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Humanwell Healthcare is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Goodwill E and Humanwell Healthcare

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

The idea behind Goodwill E Health and Humanwell 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.

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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.