Correlation Between American Shared and Enhabit

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

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

Diversification Opportunities for American Shared and Enhabit

-0.69

Correlation Coefficient

American Shared  Enhabit

Excellent diversification

The 3 months correlation between American and Enhabit is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding American Shared Hospital and Enhabit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enhabit and American Shared 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 American Shared Hospital are associated (or correlated) with Enhabit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enhabit has no effect on the direction of American Shared i.e., American Shared and Enhabit go up and down completely randomly.

Pair Corralation between American Shared and Enhabit

Considering the 90-day investment horizon American Shared Hospital is expected to under-perform the Enhabit. But the stock apears to be less risky and, when comparing its historical volatility, American Shared Hospital is 1.28 times less risky than Enhabit. The stock trades about -0.09 of its potential returns per unit of risk. The Enhabit is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  769.00  in Enhabit on December 29, 2024 and sell it today you would earn a total of  95.00  from holding Enhabit or generate 12.35% return on investment over 90 days.

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

American Shared Hospital  vs.  Enhabit

American Shared Hospital

Risk-Adjusted Performance

Very Weak

Over the last 90 days American Shared Hospital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Enhabit

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Enhabit are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, Enhabit sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with American Shared and Enhabit

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

The idea behind American Shared Hospital and Enhabit 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.