Correlation Between CTR Investments and Absolute Health

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

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

Diversification Opportunities for CTR Investments and Absolute Health

0.81

Correlation Coefficient

CTR Investments  Absolute Health

Very poor diversification

The 3 months correlation between CTR and Absolute is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding CTR Investments Consulting and Absolute Health and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Absolute Health and CTR Investments 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 CTR Investments Consulting are associated (or correlated) with Absolute Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Absolute Health has no effect on the direction of CTR Investments i.e., CTR Investments and Absolute Health go up and down completely randomly.

Pair Corralation between CTR Investments and Absolute Health

Given the investment horizon of 90 days CTR Investments Consulting is expected to generate 1.06 times more return on investment than Absolute Health. However, CTR Investments is 1.06 times more volatile than Absolute Health and. It trades about -0.05 of its potential returns per unit of risk. Absolute Health and is currently generating about -0.12 per unit of risk. If you would invest  0.08  in CTR Investments Consulting on September 1, 2024 and sell it today you would lose (0.05) from holding CTR Investments Consulting or give up 62.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

CTR Investments Consulting  vs.  Absolute Health and

CTR Investments Cons

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CTR Investments Consulting has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Absolute Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Absolute Health and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in December 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with CTR Investments and Absolute Health

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

The idea behind CTR Investments Consulting and Absolute Health and 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.