Correlation Between City View and HLS Therapeutics

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

By analyzing existing cross correlation between City View Green and HLS Therapeutics, you can compare the effects of market volatilities on City View and HLS Therapeutics 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 City View with a short position of HLS Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of City View and HLS Therapeutics.

Diversification Opportunities for City View and HLS Therapeutics

-0.59

Correlation Coefficient

City View  HLS Therapeutics

Excellent diversification

The 3 months correlation between City and HLS is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding City View Green and HLS Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HLS Therapeutics and City View 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 City View Green are associated (or correlated) with HLS Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HLS Therapeutics has no effect on the direction of City View i.e., City View and HLS Therapeutics go up and down completely randomly.

Pair Corralation between City View and HLS Therapeutics

Assuming the 90 days horizon City View Green is expected to under-perform the HLS Therapeutics. In addition to that, City View is 7.11 times more volatile than HLS Therapeutics. It trades about -0.18 of its total potential returns per unit of risk. HLS Therapeutics is currently generating about 0.24 per unit of volatility. If you would invest  244.00  in HLS Therapeutics on October 10, 2024 and sell it today you would earn a total of  31.00  from holding HLS Therapeutics or generate 12.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

City View Green  vs.  HLS Therapeutics

City View Green

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in City View Green are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, City View reported solid returns over the last few months and may actually be approaching a breakup point.

HLS Therapeutics

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HLS Therapeutics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, HLS Therapeutics may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with City View and HLS Therapeutics

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

The idea behind City View Green and HLS Therapeutics 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.