Correlation Between Caduceus Software and Evolent Health

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

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

Diversification Opportunities for Caduceus Software and Evolent Health

0.62

Correlation Coefficient

Caduceus Software  Evolent Health

Poor diversification

The 3 months correlation between Caduceus and Evolent is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Caduceus Software Systems and Evolent Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolent Health and Caduceus Software 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 Caduceus Software Systems are associated (or correlated) with Evolent Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolent Health has no effect on the direction of Caduceus Software i.e., Caduceus Software and Evolent Health go up and down completely randomly.

Pair Corralation between Caduceus Software and Evolent Health

Given the investment horizon of 90 days Caduceus Software Systems is expected to generate 2.77 times more return on investment than Evolent Health. However, Caduceus Software is 2.77 times more volatile than Evolent Health. It trades about 0.03 of its potential returns per unit of risk. Evolent Health is currently generating about -0.15 per unit of risk. If you would invest  1.19  in Caduceus Software Systems on September 4, 2024 and sell it today you would lose (0.56) from holding Caduceus Software Systems or give up 47.06% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Caduceus Software Systems  vs.  Evolent Health

Caduceus Software Systems

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Caduceus Software Systems are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Caduceus Software exhibited solid returns over the last few months and may actually be approaching a breakup point.

Evolent Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evolent Health 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 basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Caduceus Software and Evolent Health

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

The idea behind Caduceus Software Systems and Evolent 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.

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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.