Correlation Between DarioHealth Corp and CareCloud

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

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

Diversification Opportunities for DarioHealth Corp and CareCloud

-0.22

Correlation Coefficient

DarioHealth Corp  CareCloud

Very good diversification

The 3 months correlation between DarioHealth and CareCloud is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding DarioHealth Corp and CareCloud in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CareCloud and DarioHealth Corp 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 DarioHealth Corp are associated (or correlated) with CareCloud. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CareCloud has no effect on the direction of DarioHealth Corp i.e., DarioHealth Corp and CareCloud go up and down completely randomly.

Pair Corralation between DarioHealth Corp and CareCloud

Given the investment horizon of 90 days DarioHealth Corp is expected to generate 1.99 times more return on investment than CareCloud. However, DarioHealth Corp is 1.99 times more volatile than CareCloud. It trades about 0.04 of its potential returns per unit of risk. CareCloud is currently generating about -0.01 per unit of risk. If you would invest  77.00  in DarioHealth Corp on December 2, 2024 and sell it today you would lose (7.00) from holding DarioHealth Corp or give up 9.09% of portfolio value over 90 days.

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

DarioHealth Corp  vs.  CareCloud

DarioHealth Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in DarioHealth Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, DarioHealth Corp displayed solid returns over the last few months and may actually be approaching a breakup point.

CareCloud

Risk-Adjusted Performance

Very Weak

Over the last 90 days CareCloud has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, CareCloud is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with DarioHealth Corp and CareCloud

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

The idea behind DarioHealth Corp and CareCloud 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.