Correlation Between Capitol Health and Singular Health

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

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

Diversification Opportunities for Capitol Health and Singular Health

0.13

Correlation Coefficient

Capitol Health  Singular Health

Average diversification

The 3 months correlation between Capitol and Singular is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Capitol Health and Singular Health Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singular Health Group and Capitol 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 Capitol Health are associated (or correlated) with Singular Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singular Health Group has no effect on the direction of Capitol Health i.e., Capitol Health and Singular Health go up and down completely randomly.

Pair Corralation between Capitol Health and Singular Health

Assuming the 90 days trading horizon Capitol Health is expected to generate 2.38 times less return on investment than Singular Health. But when comparing it to its historical volatility, Capitol Health is 1.9 times less risky than Singular Health. It trades about 0.12 of its potential returns per unit of risk. Singular Health Group is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  8.15  in Singular Health Group on September 5, 2024 and sell it today you would earn a total of  3.85  from holding Singular Health Group or generate 47.24% return on investment over 90 days.

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

Capitol Health  vs.  Singular Health Group

Capitol Health

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Capitol Health are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward-looking indicators, Capitol Health unveiled solid returns over the last few months and may actually be approaching a breakup point.

Singular Health Group

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Singular Health Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Singular Health unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Capitol Health and Singular Health

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

The idea behind Capitol Health and Singular Health Group 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.

Check out your portfolio center.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.