Correlation Between Definitive Healthcare and Hurco Companies

Can any of the company-specific risk be diversified away by investing in both Definitive Healthcare and Hurco Companies 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 Hurco Companies 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 Hurco Companies, you can compare the effects of market volatilities on Definitive Healthcare and Hurco Companies 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 Hurco Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Definitive Healthcare and Hurco Companies.

Diversification Opportunities for Definitive Healthcare and Hurco Companies

0.07

Correlation Coefficient

Definitive Healthcare  Hurco Companies

Significant diversification

The 3 months correlation between Definitive and Hurco is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Definitive Healthcare Corp and Hurco Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hurco Companies 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 Hurco Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hurco Companies has no effect on the direction of Definitive Healthcare i.e., Definitive Healthcare and Hurco Companies go up and down completely randomly.

Pair Corralation between Definitive Healthcare and Hurco Companies

Allowing for the 90-day total investment horizon Definitive Healthcare Corp is expected to under-perform the Hurco Companies. In addition to that, Definitive Healthcare is 1.61 times more volatile than Hurco Companies. It trades about -0.03 of its total potential returns per unit of risk. Hurco Companies is currently generating about -0.01 per unit of volatility. If you would invest  2,427  in Hurco Companies on September 18, 2024 and sell it today you would lose (517.00) from holding Hurco Companies or give up 21.3% of portfolio value over 90 days.

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

Definitive Healthcare Corp  vs.  Hurco Companies

Definitive Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Definitive Healthcare Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, Definitive Healthcare is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Hurco Companies

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hurco Companies are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Hurco Companies is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Definitive Healthcare and Hurco Companies

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

The idea behind Definitive Healthcare Corp and Hurco Companies 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.