Correlation Between CardioComm Solutions and Evolent Health

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

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

Diversification Opportunities for CardioComm Solutions and Evolent Health

0.09

Correlation Coefficient

CardioComm Solutions  Evolent Health

Significant diversification

The 3 months correlation between CardioComm and Evolent is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding CardioComm Solutions and Evolent Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolent Health and CardioComm Solutions 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 CardioComm Solutions are associated (or correlated) with Evolent Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolent Health has no effect on the direction of CardioComm Solutions i.e., CardioComm Solutions and Evolent Health go up and down completely randomly.

Pair Corralation between CardioComm Solutions and Evolent Health

Assuming the 90 days horizon CardioComm Solutions is expected to under-perform the Evolent Health. In addition to that, CardioComm Solutions is 2.05 times more volatile than Evolent Health. It trades about -0.06 of its total potential returns per unit of risk. Evolent Health is currently generating about -0.04 per unit of volatility. If you would invest  1,098  in Evolent Health on December 30, 2024 and sell it today you would lose (138.00) from holding Evolent Health or give up 12.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.38%
Values	Daily Returns

CardioComm Solutions  vs.  Evolent Health

CardioComm Solutions

Risk-Adjusted Performance

Very Weak

Over the last 90 days CardioComm Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Evolent Health

Risk-Adjusted Performance

Very Weak

Over the last 90 days Evolent Health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with CardioComm Solutions and Evolent Health

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

The idea behind CardioComm Solutions and Evolent Health 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.

Check out your portfolio center.

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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.