Correlation Between 51Talk Online and Cardinal Health

Can any of the company-specific risk be diversified away by investing in both 51Talk Online and Cardinal 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 51Talk Online and Cardinal Health into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 51Talk Online Education and Cardinal Health, you can compare the effects of market volatilities on 51Talk Online and Cardinal 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 51Talk Online with a short position of Cardinal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of 51Talk Online and Cardinal Health.

Diversification Opportunities for 51Talk Online and Cardinal Health

-0.21

Correlation Coefficient

51Talk Online  Cardinal Health

Very good diversification

The 3 months correlation between 51Talk and Cardinal is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding 51Talk Online Education and Cardinal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Health and 51Talk Online 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 51Talk Online Education are associated (or correlated) with Cardinal Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardinal Health has no effect on the direction of 51Talk Online i.e., 51Talk Online and Cardinal Health go up and down completely randomly.

Pair Corralation between 51Talk Online and Cardinal Health

Considering the 90-day investment horizon 51Talk Online is expected to generate 1.03 times less return on investment than Cardinal Health. In addition to that, 51Talk Online is 3.05 times more volatile than Cardinal Health. It trades about 0.03 of its total potential returns per unit of risk. Cardinal Health is currently generating about 0.1 per unit of volatility. If you would invest  10,929  in Cardinal Health on September 27, 2024 and sell it today you would earn a total of  988.00  from holding Cardinal Health or generate 9.04% return on investment over 90 days.

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

51Talk Online Education  vs.  Cardinal Health

51Talk Online Education

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in 51Talk Online Education are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, 51Talk Online may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Cardinal Health

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cardinal Health are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Cardinal Health may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with 51Talk Online and Cardinal Health

The main advantage of trading using opposite 51Talk Online and Cardinal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 51Talk Online position performs unexpectedly, Cardinal 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 Cardinal Health will offset losses from the drop in Cardinal Health's long position.

The idea behind 51Talk Online Education and Cardinal Health 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.