Correlation Between Future Health and Digital Health

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

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

Diversification Opportunities for Future Health and Digital Health

0.46

Correlation Coefficient

Future Health  Digital Health

Very weak diversification

The 3 months correlation between Future and Digital is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Future Health ESG and Digital Health Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital Health Acqui and Future 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 Future Health ESG are associated (or correlated) with Digital Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital Health Acqui has no effect on the direction of Future Health i.e., Future Health and Digital Health go up and down completely randomly.

Pair Corralation between Future Health and Digital Health

If you would invest  17.00  in Digital Health Acquisition on September 17, 2024 and sell it today you would earn a total of  0.00  from holding Digital Health Acquisition or generate 0.0% return on investment over 90 days.

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

Future Health ESG  vs.  Digital Health Acquisition

Future Health ESG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Future Health ESG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Future Health is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Digital Health Acqui

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Digital Health Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, Digital Health is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Future Health and Digital Health

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

The idea behind Future Health ESG and Digital Health Acquisition 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.