Correlation Between Doximity and American Shared

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

By analyzing existing cross correlation between Doximity and American Shared Hospital, you can compare the effects of market volatilities on Doximity and American Shared 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 Doximity with a short position of American Shared. Check out your portfolio center. Please also check ongoing floating volatility patterns of Doximity and American Shared.

Diversification Opportunities for Doximity and American Shared

0.2

Correlation Coefficient

Doximity  American Shared

Modest diversification

The 3 months correlation between Doximity and American is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Doximity and American Shared Hospital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Shared Hospital and Doximity 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 Doximity are associated (or correlated) with American Shared. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Shared Hospital has no effect on the direction of Doximity i.e., Doximity and American Shared go up and down completely randomly.

Pair Corralation between Doximity and American Shared

Given the investment horizon of 90 days Doximity is expected to generate 1.44 times more return on investment than American Shared. However, Doximity is 1.44 times more volatile than American Shared Hospital. It trades about 0.04 of its potential returns per unit of risk. American Shared Hospital is currently generating about 0.02 per unit of risk. If you would invest  3,283  in Doximity on October 3, 2024 and sell it today you would earn a total of  2,056  from holding Doximity or generate 62.63% return on investment over 90 days.

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

Doximity  vs.  American Shared Hospital

Doximity

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Doximity are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady fundamental indicators, Doximity unveiled solid returns over the last few months and may actually be approaching a breakup point.

American Shared Hospital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Shared Hospital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, American Shared is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Doximity and American Shared

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

The idea behind Doximity and American Shared Hospital 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.