Correlation Between American Shared and P3 Health

Can any of the company-specific risk be diversified away by investing in both American Shared and P3 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 American Shared and P3 Health 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 P3 Health Partners, you can compare the effects of market volatilities on American Shared and P3 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 American Shared with a short position of P3 Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Shared and P3 Health.

Diversification Opportunities for American Shared and P3 Health

0.36

Correlation Coefficient

American Shared  P3 Health

Weak diversification

The 3 months correlation between American and PIII is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding American Shared Hospital and P3 Health Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on P3 Health Partners 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 P3 Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of P3 Health Partners has no effect on the direction of American Shared i.e., American Shared and P3 Health go up and down completely randomly.

Pair Corralation between American Shared and P3 Health

Considering the 90-day investment horizon American Shared Hospital is expected to under-perform the P3 Health. But the stock apears to be less risky and, when comparing its historical volatility, American Shared Hospital is 3.01 times less risky than P3 Health. The stock trades about -0.13 of its potential returns per unit of risk. The P3 Health Partners is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  19.00  in P3 Health Partners on December 21, 2024 and sell it today you would lose (2.00) from holding P3 Health Partners or give up 10.53% of portfolio value over 90 days.

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

American Shared Hospital  vs.  P3 Health Partners

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 weak performance in the last few months, the Stock's primary indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

P3 Health Partners

Risk-Adjusted Performance

Very Weak

Over the last 90 days P3 Health Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, P3 Health is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with American Shared and P3 Health

The main advantage of trading using opposite American Shared and P3 Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Shared position performs unexpectedly, P3 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 P3 Health will offset losses from the drop in P3 Health's long position.

The idea behind American Shared Hospital and P3 Health Partners 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.