Correlation Between Healthcare Triangle and Heartbeam

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

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

Diversification Opportunities for Healthcare Triangle and Heartbeam

0.53

Correlation Coefficient

Healthcare Triangle  Heartbeam

Very weak diversification

The 3 months correlation between Healthcare and Heartbeam is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Healthcare Triangle and Heartbeam in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heartbeam and Healthcare Triangle 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 Healthcare Triangle are associated (or correlated) with Heartbeam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heartbeam has no effect on the direction of Healthcare Triangle i.e., Healthcare Triangle and Heartbeam go up and down completely randomly.

Pair Corralation between Healthcare Triangle and Heartbeam

Given the investment horizon of 90 days Healthcare Triangle is expected to generate 3.95 times more return on investment than Heartbeam. However, Healthcare Triangle is 3.95 times more volatile than Heartbeam. It trades about 0.06 of its potential returns per unit of risk. Heartbeam is currently generating about 0.12 per unit of risk. If you would invest  73.00  in Healthcare Triangle on September 2, 2024 and sell it today you would lose (4.00) from holding Healthcare Triangle or give up 5.48% of portfolio value over 90 days.

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

Healthcare Triangle  vs.  Heartbeam

Healthcare Triangle

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Healthcare Triangle are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, Healthcare Triangle demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Heartbeam

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Heartbeam are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Heartbeam unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Healthcare Triangle and Heartbeam

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

The idea behind Healthcare Triangle and Heartbeam 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.