Correlation Between FEMALE HEALTH and HEALTHSTREAM (HL5SG)

Can any of the company-specific risk be diversified away by investing in both FEMALE HEALTH and HEALTHSTREAM (HL5SG) 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 FEMALE HEALTH and HEALTHSTREAM (HL5SG) into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FEMALE HEALTH and HEALTHSTREAM, you can compare the effects of market volatilities on FEMALE HEALTH and HEALTHSTREAM (HL5SG) 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 FEMALE HEALTH with a short position of HEALTHSTREAM (HL5SG). Check out your portfolio center. Please also check ongoing floating volatility patterns of FEMALE HEALTH and HEALTHSTREAM (HL5SG).

Diversification Opportunities for FEMALE HEALTH and HEALTHSTREAM (HL5SG)

-0.5

Correlation Coefficient

FEMALE HEALTH  HEALTHSTREAM (HL5SG)

Very good diversification

The 3 months correlation between FEMALE and HEALTHSTREAM is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding FEMALE HEALTH and HEALTHSTREAM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEALTHSTREAM (HL5SG) and FEMALE 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 FEMALE HEALTH are associated (or correlated) with HEALTHSTREAM (HL5SG). Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEALTHSTREAM (HL5SG) has no effect on the direction of FEMALE HEALTH i.e., FEMALE HEALTH and HEALTHSTREAM (HL5SG) go up and down completely randomly.

Pair Corralation between FEMALE HEALTH and HEALTHSTREAM (HL5SG)

Assuming the 90 days trading horizon FEMALE HEALTH is expected to generate 3.17 times more return on investment than HEALTHSTREAM (HL5SG). However, FEMALE HEALTH is 3.17 times more volatile than HEALTHSTREAM. It trades about 0.07 of its potential returns per unit of risk. HEALTHSTREAM is currently generating about 0.14 per unit of risk. If you would invest  84.00  in FEMALE HEALTH on October 23, 2024 and sell it today you would earn a total of  12.00  from holding FEMALE HEALTH or generate 14.29% return on investment over 90 days.

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

FEMALE HEALTH  vs.  HEALTHSTREAM

FEMALE HEALTH

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FEMALE HEALTH are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, FEMALE HEALTH exhibited solid returns over the last few months and may actually be approaching a breakup point.

HEALTHSTREAM (HL5SG)

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in HEALTHSTREAM are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, HEALTHSTREAM (HL5SG) unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FEMALE HEALTH and HEALTHSTREAM (HL5SG)

The main advantage of trading using opposite FEMALE HEALTH and HEALTHSTREAM (HL5SG) positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FEMALE HEALTH position performs unexpectedly, HEALTHSTREAM (HL5SG) 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 HEALTHSTREAM (HL5SG) will offset losses from the drop in HEALTHSTREAM (HL5SG)'s long position.

The idea behind FEMALE HEALTH and HEALTHSTREAM 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 Stocks Directory module to find actively traded stocks across global markets.