Correlation Between Definitive Healthcare and Greentown Management

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

By analyzing existing cross correlation between Definitive Healthcare Corp and Greentown Management Holdings, you can compare the effects of market volatilities on Definitive Healthcare and Greentown Management 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 Definitive Healthcare with a short position of Greentown Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Definitive Healthcare and Greentown Management.

Diversification Opportunities for Definitive Healthcare and Greentown Management

0.01

Correlation Coefficient

Definitive Healthcare  Greentown Management

Significant diversification

The 3 months correlation between Definitive and Greentown is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Definitive Healthcare Corp and Greentown Management Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greentown Management and Definitive Healthcare 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 Definitive Healthcare Corp are associated (or correlated) with Greentown Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greentown Management has no effect on the direction of Definitive Healthcare i.e., Definitive Healthcare and Greentown Management go up and down completely randomly.

Pair Corralation between Definitive Healthcare and Greentown Management

If you would invest  430.00  in Definitive Healthcare Corp on October 7, 2024 and sell it today you would earn a total of  6.00  from holding Definitive Healthcare Corp or generate 1.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.35%
Values	Daily Returns

Definitive Healthcare Corp  vs.  Greentown Management Holdings

Definitive Healthcare

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Definitive Healthcare Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical indicators, Definitive Healthcare is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Greentown Management

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Greentown Management Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical indicators, Greentown Management may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Definitive Healthcare and Greentown Management

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

The idea behind Definitive Healthcare Corp and Greentown Management Holdings 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.