Correlation Between CVS Health and ATOSS SOFTWARE

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

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

Diversification Opportunities for CVS Health and ATOSS SOFTWARE

0.62

Correlation Coefficient

CVS Health  ATOSS SOFTWARE

Poor diversification

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

Pair Corralation between CVS Health and ATOSS SOFTWARE

Assuming the 90 days trading horizon CVS Health is expected to under-perform the ATOSS SOFTWARE. In addition to that, CVS Health is 1.09 times more volatile than ATOSS SOFTWARE. It trades about -0.04 of its total potential returns per unit of risk. ATOSS SOFTWARE is currently generating about 0.03 per unit of volatility. If you would invest  9,689  in ATOSS SOFTWARE on September 26, 2024 and sell it today you would earn a total of  1,631  from holding ATOSS SOFTWARE or generate 16.83% return on investment over 90 days.

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

CVS Health  vs.  ATOSS SOFTWARE

CVS Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CVS Health has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

ATOSS SOFTWARE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ATOSS SOFTWARE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with CVS Health and ATOSS SOFTWARE

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

The idea behind CVS Health and ATOSS SOFTWARE 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..