Correlation Between AnalytixInsight and NeuPath Health

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

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

Diversification Opportunities for AnalytixInsight and NeuPath Health

0.6

Correlation Coefficient

AnalytixInsight  NeuPath Health

Poor diversification

The 3 months correlation between AnalytixInsight and NeuPath is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding AnalytixInsight and NeuPath Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NeuPath Health and AnalytixInsight 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 AnalytixInsight are associated (or correlated) with NeuPath Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NeuPath Health has no effect on the direction of AnalytixInsight i.e., AnalytixInsight and NeuPath Health go up and down completely randomly.

Pair Corralation between AnalytixInsight and NeuPath Health

Assuming the 90 days horizon AnalytixInsight is expected to generate 5.61 times more return on investment than NeuPath Health. However, AnalytixInsight is 5.61 times more volatile than NeuPath Health. It trades about 0.02 of its potential returns per unit of risk. NeuPath Health is currently generating about -0.04 per unit of risk. If you would invest  3.00  in AnalytixInsight on September 1, 2024 and sell it today you would lose (1.50) from holding AnalytixInsight or give up 50.0% of portfolio value over 90 days.

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

AnalytixInsight  vs.  NeuPath Health

AnalytixInsight

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AnalytixInsight are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, AnalytixInsight showed solid returns over the last few months and may actually be approaching a breakup point.

NeuPath Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NeuPath Health has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with AnalytixInsight and NeuPath Health

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

The idea behind AnalytixInsight and NeuPath Health 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.