Correlation Between Emergent Health and GainClients

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

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

Diversification Opportunities for Emergent Health and GainClients

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Correlation Coefficient

Emergent Health  GainClients

Pay attention - limited upside

The 3 months correlation between Emergent and GainClients is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Emergent Health Corp and GainClients in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GainClients and Emergent Health 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 Emergent Health Corp are associated (or correlated) with GainClients. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GainClients has no effect on the direction of Emergent Health i.e., Emergent Health and GainClients go up and down completely randomly.

Pair Corralation between Emergent Health and GainClients

Given the investment horizon of 90 days Emergent Health is expected to generate 2.97 times less return on investment than GainClients. But when comparing it to its historical volatility, Emergent Health Corp is 3.48 times less risky than GainClients. It trades about 0.07 of its potential returns per unit of risk. GainClients is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  0.23  in GainClients on September 27, 2024 and sell it today you would lose (0.22) from holding GainClients or give up 95.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Emergent Health Corp  vs.  GainClients

Emergent Health Corp

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Emergent Health Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

GainClients

Risk-Adjusted Performance

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Very Weak

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

Pair Trading with Emergent Health and GainClients

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

The idea behind Emergent Health Corp and GainClients 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.