Correlation Between Healthcare Triangle and EGF Theramed

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

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

Diversification Opportunities for Healthcare Triangle and EGF Theramed

0.43

Correlation Coefficient

Healthcare Triangle  EGF Theramed

Very weak diversification

The 3 months correlation between Healthcare and EGF is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Healthcare Triangle and EGF Theramed Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EGF Theramed Health 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 EGF Theramed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EGF Theramed Health has no effect on the direction of Healthcare Triangle i.e., Healthcare Triangle and EGF Theramed go up and down completely randomly.

Pair Corralation between Healthcare Triangle and EGF Theramed

Given the investment horizon of 90 days Healthcare Triangle is expected to under-perform the EGF Theramed. But the stock apears to be less risky and, when comparing its historical volatility, Healthcare Triangle is 2.66 times less risky than EGF Theramed. The stock trades about -0.03 of its potential returns per unit of risk. The EGF Theramed Health is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  10.00  in EGF Theramed Health on December 29, 2024 and sell it today you would lose (2.48) from holding EGF Theramed Health or give up 24.8% 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.  EGF Theramed Health

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.

EGF Theramed Health

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EGF Theramed Health are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent technical indicators, EGF Theramed reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Healthcare Triangle and EGF Theramed

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

The idea behind Healthcare Triangle and EGF Theramed Health 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 CEOs Directory module to screen CEOs from public companies around the world.