Correlation Between Healthcare Triangle and Cogstate

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

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

Diversification Opportunities for Healthcare Triangle and Cogstate

-0.89

Correlation Coefficient

Healthcare Triangle  Cogstate

Pay attention - limited upside

The 3 months correlation between Healthcare and Cogstate is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Healthcare Triangle and Cogstate Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogstate Limited 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 Cogstate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cogstate Limited has no effect on the direction of Healthcare Triangle i.e., Healthcare Triangle and Cogstate go up and down completely randomly.

Pair Corralation between Healthcare Triangle and Cogstate

Given the investment horizon of 90 days Healthcare Triangle is expected to under-perform the Cogstate. In addition to that, Healthcare Triangle is 5.3 times more volatile than Cogstate Limited. It trades about -0.03 of its total potential returns per unit of risk. Cogstate Limited is currently generating about 0.17 per unit of volatility. If you would invest  63.00  in Cogstate Limited on December 30, 2024 and sell it today you would earn a total of  19.00  from holding Cogstate Limited or generate 30.16% return on investment over 90 days.

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

Healthcare Triangle  vs.  Cogstate Limited

Healthcare Triangle

Risk-Adjusted Performance

Very Weak

Over the last 90 days Healthcare Triangle has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile 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.

Cogstate Limited

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cogstate Limited are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Cogstate reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Healthcare Triangle and Cogstate

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

The idea behind Healthcare Triangle and Cogstate Limited 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.