Correlation Between Absolute Health and Burnham Holdings

Can any of the company-specific risk be diversified away by investing in both Absolute Health and Burnham Holdings 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 Burnham Holdings 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 Burnham Holdings, you can compare the effects of market volatilities on Absolute Health and Burnham Holdings 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 Burnham Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absolute Health and Burnham Holdings.

Diversification Opportunities for Absolute Health and Burnham Holdings

-0.33

Correlation Coefficient

Absolute Health  Burnham Holdings

Very good diversification

The 3 months correlation between Absolute and Burnham is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Absolute Health and and Burnham Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burnham Holdings 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 Burnham Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Burnham Holdings has no effect on the direction of Absolute Health i.e., Absolute Health and Burnham Holdings go up and down completely randomly.

Pair Corralation between Absolute Health and Burnham Holdings

Given the investment horizon of 90 days Absolute Health and is expected to under-perform the Burnham Holdings. In addition to that, Absolute Health is 5.84 times more volatile than Burnham Holdings. It trades about -0.13 of its total potential returns per unit of risk. Burnham Holdings is currently generating about 0.06 per unit of volatility. If you would invest  1,224  in Burnham Holdings on September 27, 2024 and sell it today you would earn a total of  171.00  from holding Burnham Holdings or generate 13.97% return on investment over 90 days.

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

Absolute Health and  vs.  Burnham Holdings

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 abnormal performance in the last few months, the Stock's technical and fundamental 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.

Burnham Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Burnham Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Burnham Holdings is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Absolute Health and Burnham Holdings

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

The idea behind Absolute Health and and Burnham Holdings 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.