Correlation Between HEALTHSTREAM (HL5SG) and ABERFORTH SMCOS

Can any of the company-specific risk be diversified away by investing in both HEALTHSTREAM (HL5SG) and ABERFORTH SMCOS 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 HEALTHSTREAM (HL5SG) and ABERFORTH SMCOS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HEALTHSTREAM and ABERFORTH SMCOS TRLS 01, you can compare the effects of market volatilities on HEALTHSTREAM (HL5SG) and ABERFORTH SMCOS 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 HEALTHSTREAM (HL5SG) with a short position of ABERFORTH SMCOS. Check out your portfolio center. Please also check ongoing floating volatility patterns of HEALTHSTREAM (HL5SG) and ABERFORTH SMCOS.

Diversification Opportunities for HEALTHSTREAM (HL5SG) and ABERFORTH SMCOS

-0.51

Correlation Coefficient

HEALTHSTREAM (HL5SG)  ABERFORTH SMCOS

Excellent diversification

The 3 months correlation between HEALTHSTREAM and ABERFORTH is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding HEALTHSTREAM and ABERFORTH SMCOS TRLS 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABERFORTH SMCOS TRLS and HEALTHSTREAM (HL5SG) 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 HEALTHSTREAM are associated (or correlated) with ABERFORTH SMCOS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABERFORTH SMCOS TRLS has no effect on the direction of HEALTHSTREAM (HL5SG) i.e., HEALTHSTREAM (HL5SG) and ABERFORTH SMCOS go up and down completely randomly.

Pair Corralation between HEALTHSTREAM (HL5SG) and ABERFORTH SMCOS

Assuming the 90 days trading horizon HEALTHSTREAM is expected to generate 1.45 times more return on investment than ABERFORTH SMCOS. However, HEALTHSTREAM (HL5SG) is 1.45 times more volatile than ABERFORTH SMCOS TRLS 01. It trades about 0.14 of its potential returns per unit of risk. ABERFORTH SMCOS TRLS 01 is currently generating about -0.09 per unit of risk. If you would invest  2,557  in HEALTHSTREAM on October 24, 2024 and sell it today you would earn a total of  503.00  from holding HEALTHSTREAM or generate 19.67% return on investment over 90 days.

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

HEALTHSTREAM  vs.  ABERFORTH SMCOS TRLS 01

HEALTHSTREAM (HL5SG)

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in HEALTHSTREAM are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, HEALTHSTREAM (HL5SG) unveiled solid returns over the last few months and may actually be approaching a breakup point.

ABERFORTH SMCOS TRLS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ABERFORTH SMCOS TRLS 01 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with HEALTHSTREAM (HL5SG) and ABERFORTH SMCOS

The main advantage of trading using opposite HEALTHSTREAM (HL5SG) and ABERFORTH SMCOS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HEALTHSTREAM (HL5SG) position performs unexpectedly, ABERFORTH SMCOS 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 ABERFORTH SMCOS will offset losses from the drop in ABERFORTH SMCOS's long position.

The idea behind HEALTHSTREAM and ABERFORTH SMCOS TRLS 01 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.