Correlation Between Health Sciences and Encounter Technologi

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

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

Diversification Opportunities for Health Sciences and Encounter Technologi

0.0

Correlation Coefficient

Health Sciences  Encounter Technologi

Pay attention - limited upside

The 3 months correlation between Health and Encounter is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Health Sciences Gr and Encounter Technologi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Encounter Technologi and Health Sciences 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 Health Sciences Gr are associated (or correlated) with Encounter Technologi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Encounter Technologi has no effect on the direction of Health Sciences i.e., Health Sciences and Encounter Technologi go up and down completely randomly.

Pair Corralation between Health Sciences and Encounter Technologi

Given the investment horizon of 90 days Health Sciences Gr is expected to under-perform the Encounter Technologi. But the pink sheet apears to be less risky and, when comparing its historical volatility, Health Sciences Gr is 35.65 times less risky than Encounter Technologi. The pink sheet trades about -0.04 of its potential returns per unit of risk. The Encounter Technologi is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  0.01  in Encounter Technologi on September 29, 2024 and sell it today you would lose (0.01) from holding Encounter Technologi or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	62.58%
Values	Daily Returns

Health Sciences Gr  vs.  Encounter Technologi

Health Sciences Gr

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Health Sciences Gr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Health Sciences is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Encounter Technologi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Encounter Technologi has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Encounter Technologi is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Health Sciences and Encounter Technologi

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

The idea behind Health Sciences Gr and Encounter Technologi 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.