Correlation Between Agilon Health and Community Health

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

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

Diversification Opportunities for Agilon Health and Community Health

0.89

Correlation Coefficient

Agilon Health  Community Health

Very poor diversification

The 3 months correlation between Agilon and Community is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding agilon health and Community Health Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Community Health Systems and Agilon 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 agilon health are associated (or correlated) with Community Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Community Health Systems has no effect on the direction of Agilon Health i.e., Agilon Health and Community Health go up and down completely randomly.

Pair Corralation between Agilon Health and Community Health

Considering the 90-day investment horizon agilon health is expected to generate 1.87 times more return on investment than Community Health. However, Agilon Health is 1.87 times more volatile than Community Health Systems. It trades about -0.05 of its potential returns per unit of risk. Community Health Systems is currently generating about -0.14 per unit of risk. If you would invest  331.00  in agilon health on September 12, 2024 and sell it today you would lose (121.00) from holding agilon health or give up 36.56% of portfolio value over 90 days.

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

agilon health  vs.  Community Health Systems

agilon health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days agilon health 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 technical and fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Community Health Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Community Health Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Agilon Health and Community Health

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

The idea behind agilon health and Community Health Systems 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 Global Correlations module to find global opportunities by holding instruments from different markets.