Correlation Between Heartbeam and Healthcare Triangle

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

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

Diversification Opportunities for Heartbeam and Healthcare Triangle

0.6

Correlation Coefficient

Heartbeam  Healthcare Triangle

Poor diversification

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

Pair Corralation between Heartbeam and Healthcare Triangle

Given the investment horizon of 90 days Heartbeam is expected to generate 2.38 times less return on investment than Healthcare Triangle. But when comparing it to its historical volatility, Heartbeam is 4.02 times less risky than Healthcare Triangle. It trades about 0.1 of its potential returns per unit of risk. Healthcare Triangle is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  73.00  in Healthcare Triangle on August 31, 2024 and sell it today you would lose (5.00) from holding Healthcare Triangle or give up 6.85% of portfolio value over 90 days.

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

Heartbeam  vs.  Healthcare Triangle

Heartbeam

Risk-Adjusted Performance

7 of 100

OK

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

Healthcare Triangle

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Healthcare Triangle are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, Healthcare Triangle demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Heartbeam and Healthcare Triangle

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

The idea behind Heartbeam and Healthcare Triangle 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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.