Correlation Between Evolent Health and Caduceus Software

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

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

Diversification Opportunities for Evolent Health and Caduceus Software

-0.26

Correlation Coefficient

Evolent Health  Caduceus Software

Very good diversification

The 3 months correlation between Evolent and Caduceus is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Evolent Health and Caduceus Software Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caduceus Software Systems and Evolent 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 Evolent Health are associated (or correlated) with Caduceus Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caduceus Software Systems has no effect on the direction of Evolent Health i.e., Evolent Health and Caduceus Software go up and down completely randomly.

Pair Corralation between Evolent Health and Caduceus Software

Considering the 90-day investment horizon Evolent Health is expected to under-perform the Caduceus Software. But the stock apears to be less risky and, when comparing its historical volatility, Evolent Health is 2.73 times less risky than Caduceus Software. The stock trades about -0.14 of its potential returns per unit of risk. The Caduceus Software Systems is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  0.66  in Caduceus Software Systems on December 2, 2024 and sell it today you would earn a total of  0.04  from holding Caduceus Software Systems or generate 6.06% return on investment over 90 days.

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

Evolent Health  vs.  Caduceus Software Systems

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 inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Caduceus Software Systems

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Caduceus Software Systems are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Caduceus Software exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Evolent Health and Caduceus Software

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

The idea behind Evolent Health and Caduceus Software Systems 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.