Correlation Between Community Health and Agilon Health

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

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

Diversification Opportunities for Community Health and Agilon Health

0.23

Correlation Coefficient

Community Health  Agilon Health

Modest diversification

The 3 months correlation between Community and Agilon is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Community Health Systems and agilon health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on agilon health and Community 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 Community Health Systems are associated (or correlated) with Agilon Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of agilon health has no effect on the direction of Community Health i.e., Community Health and Agilon Health go up and down completely randomly.

Pair Corralation between Community Health and Agilon Health

Considering the 90-day investment horizon Community Health Systems is expected to under-perform the Agilon Health. But the stock apears to be less risky and, when comparing its historical volatility, Community Health Systems is 1.47 times less risky than Agilon Health. The stock trades about -0.04 of its potential returns per unit of risk. The agilon health is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  230.00  in agilon health on December 2, 2024 and sell it today you would earn a total of  82.00  from holding agilon health or generate 35.65% return on investment over 90 days.

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

Community Health Systems  vs.  agilon health

Community Health Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days Community Health Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

agilon health

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in agilon health are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile technical and fundamental indicators, Agilon Health disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Community Health and Agilon Health

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

The idea behind Community Health Systems and agilon 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.