Correlation Between Definitive Healthcare and Mars Acquisition

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

Diversification Opportunities for Definitive Healthcare and Mars Acquisition

-0.4

Correlation Coefficient

Definitive Healthcare  Mars Acquisition

Very good diversification

The 3 months correlation between Definitive and Mars is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Definitive Healthcare Corp and Mars Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mars Acquisition Corp 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 Mars Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mars Acquisition Corp has no effect on the direction of Definitive Healthcare i.e., Definitive Healthcare and Mars Acquisition go up and down completely randomly.

Pair Corralation between Definitive Healthcare and Mars Acquisition

If you would invest  416.00  in Definitive Healthcare Corp on October 24, 2024 and sell it today you would earn a total of  54.50  from holding Definitive Healthcare Corp or generate 13.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	31.58%
Values	Daily Returns

Definitive Healthcare Corp  vs.  Mars Acquisition Corp

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 current stock price confusion, may contribute to short-horizon losses for the traders.

Mars Acquisition Corp

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Mars Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively unsteady basic indicators, Mars Acquisition reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Definitive Healthcare and Mars Acquisition

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

The idea behind Definitive Healthcare Corp and Mars Acquisition Corp 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.