Correlation Between Absolute Health and CTR Investments

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

Diversification Opportunities for Absolute Health and CTR Investments

0.79

Correlation Coefficient

Absolute Health  CTR Investments

Poor diversification

The 3 months correlation between Absolute and CTR is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Absolute Health and and CTR Investments Consulting in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTR Investments Cons 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 CTR Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTR Investments Cons has no effect on the direction of Absolute Health i.e., Absolute Health and CTR Investments go up and down completely randomly.

Pair Corralation between Absolute Health and CTR Investments

Given the investment horizon of 90 days Absolute Health and is expected to under-perform the CTR Investments. But the pink sheet apears to be less risky and, when comparing its historical volatility, Absolute Health and is 1.05 times less risky than CTR Investments. The pink sheet trades about -0.12 of its potential returns per unit of risk. The CTR Investments Consulting is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  0.08  in CTR Investments Consulting on September 3, 2024 and sell it today you would lose (0.05) from holding CTR Investments Consulting or give up 62.5% of portfolio value over 90 days.

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

Absolute Health and  vs.  CTR Investments Consulting

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 January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

CTR Investments Cons

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CTR Investments Consulting has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak 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 current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Absolute Health and CTR Investments

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

The idea behind Absolute Health and and CTR Investments Consulting 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.