Correlation Between Absolute Health and BLNG

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

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

Diversification Opportunities for Absolute Health and BLNG

-0.61

Correlation Coefficient

Absolute Health  BLNG

Excellent diversification

The 3 months correlation between Absolute and BLNG is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Absolute Health and and BLNG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BLNG and Absolute 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 Absolute Health and are associated (or correlated) with BLNG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BLNG has no effect on the direction of Absolute Health i.e., Absolute Health and BLNG go up and down completely randomly.

Pair Corralation between Absolute Health and BLNG

Given the investment horizon of 90 days Absolute Health and is expected to generate 123.61 times more return on investment than BLNG. However, Absolute Health is 123.61 times more volatile than BLNG. It trades about 0.03 of its potential returns per unit of risk. BLNG is currently generating about 0.06 per unit of risk. If you would invest  0.52  in Absolute Health and on October 10, 2024 and sell it today you would lose (0.52) from holding Absolute Health and or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	25.96%
Values	Daily Returns

Absolute Health and  vs.  BLNG

Absolute Health

Risk-Adjusted Performance

0 of 100

Very Weak

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

BLNG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BLNG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, BLNG is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Absolute Health and BLNG

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

The idea behind Absolute Health and and BLNG 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.