Correlation Between Definitive Healthcare and Lees Pharmaceutical

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

Diversification Opportunities for Definitive Healthcare and Lees Pharmaceutical

0.26

Correlation Coefficient

Definitive Healthcare  Lees Pharmaceutical

Modest diversification

The 3 months correlation between Definitive and Lees is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Definitive Healthcare Corp and Lees Pharmaceutical Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lees Pharmaceutical 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 Lees Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lees Pharmaceutical has no effect on the direction of Definitive Healthcare i.e., Definitive Healthcare and Lees Pharmaceutical go up and down completely randomly.

Pair Corralation between Definitive Healthcare and Lees Pharmaceutical

If you would invest  0.01  in Lees Pharmaceutical Holdings on October 7, 2024 and sell it today you would earn a total of  0.00  from holding Lees Pharmaceutical Holdings or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	5.0%
Values	Daily Returns

Definitive Healthcare Corp  vs.  Lees Pharmaceutical 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.

Lees Pharmaceutical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lees Pharmaceutical Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Lees Pharmaceutical is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Definitive Healthcare and Lees Pharmaceutical

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

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