Correlation Between Certara and Privia Health

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

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

Diversification Opportunities for Certara and Privia Health

0.47

Correlation Coefficient

Certara  Privia Health

Very weak diversification

The 3 months correlation between Certara and Privia is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Certara and Privia Health Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Privia Health Group and Certara 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 Certara are associated (or correlated) with Privia Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Privia Health Group has no effect on the direction of Certara i.e., Certara and Privia Health go up and down completely randomly.

Pair Corralation between Certara and Privia Health

Given the investment horizon of 90 days Certara is expected to under-perform the Privia Health. In addition to that, Certara is 1.41 times more volatile than Privia Health Group. It trades about -0.01 of its total potential returns per unit of risk. Privia Health Group is currently generating about 0.13 per unit of volatility. If you would invest  1,947  in Privia Health Group on December 29, 2024 and sell it today you would earn a total of  312.00  from holding Privia Health Group or generate 16.02% return on investment over 90 days.

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

Certara  vs.  Privia Health Group

Certara

Risk-Adjusted Performance

Very Weak

Over the last 90 days Certara has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Certara is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Privia Health Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Privia Health Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Privia Health sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Certara and Privia Health

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

The idea behind Certara and Privia 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.