Correlation Between Healthcare Triangle and Fonar

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

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

Diversification Opportunities for Healthcare Triangle and Fonar

-0.29

Correlation Coefficient

Healthcare Triangle  Fonar

Very good diversification

The 3 months correlation between Healthcare and Fonar is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Healthcare Triangle and Fonar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fonar 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 Fonar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fonar has no effect on the direction of Healthcare Triangle i.e., Healthcare Triangle and Fonar go up and down completely randomly.

Pair Corralation between Healthcare Triangle and Fonar

Given the investment horizon of 90 days Healthcare Triangle is expected to generate 6.62 times more return on investment than Fonar. However, Healthcare Triangle is 6.62 times more volatile than Fonar. It trades about 0.04 of its potential returns per unit of risk. Fonar is currently generating about -0.02 per unit of risk. If you would invest  131.00  in Healthcare Triangle on October 6, 2024 and sell it today you would lose (11.00) from holding Healthcare Triangle or give up 8.4% of portfolio value over 90 days.

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

Healthcare Triangle  vs.  Fonar

Healthcare Triangle

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Healthcare Triangle are ranked lower than 10 (%) 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.

Fonar

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fonar has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Fonar is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Healthcare Triangle and Fonar

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

The idea behind Healthcare Triangle and Fonar 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.