Correlation Between HEALTHSTREAM (HL5SG) and CHRYSALIS INVESTMENTS

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

By analyzing existing cross correlation between HEALTHSTREAM and CHRYSALIS INVESTMENTS LTD, you can compare the effects of market volatilities on HEALTHSTREAM (HL5SG) and CHRYSALIS INVESTMENTS 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 CHRYSALIS INVESTMENTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of HEALTHSTREAM (HL5SG) and CHRYSALIS INVESTMENTS.

Diversification Opportunities for HEALTHSTREAM (HL5SG) and CHRYSALIS INVESTMENTS

0.62

Correlation Coefficient

HEALTHSTREAM (HL5SG)  CHRYSALIS INVESTMENTS

Poor diversification

The 3 months correlation between HEALTHSTREAM and CHRYSALIS is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding HEALTHSTREAM and CHRYSALIS INVESTMENTS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHRYSALIS INVESTMENTS LTD 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 CHRYSALIS INVESTMENTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHRYSALIS INVESTMENTS LTD has no effect on the direction of HEALTHSTREAM (HL5SG) i.e., HEALTHSTREAM (HL5SG) and CHRYSALIS INVESTMENTS go up and down completely randomly.

Pair Corralation between HEALTHSTREAM (HL5SG) and CHRYSALIS INVESTMENTS

Assuming the 90 days trading horizon HEALTHSTREAM is expected to generate 0.69 times more return on investment than CHRYSALIS INVESTMENTS. However, HEALTHSTREAM is 1.45 times less risky than CHRYSALIS INVESTMENTS. It trades about -0.07 of its potential returns per unit of risk. CHRYSALIS INVESTMENTS LTD is currently generating about -0.1 per unit of risk. If you would invest  3,057  in HEALTHSTREAM on December 26, 2024 and sell it today you would lose (177.00) from holding HEALTHSTREAM or give up 5.79% of portfolio value over 90 days.

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

HEALTHSTREAM  vs.  CHRYSALIS INVESTMENTS LTD

HEALTHSTREAM (HL5SG)

Risk-Adjusted Performance

Very Weak

Over the last 90 days HEALTHSTREAM has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, HEALTHSTREAM (HL5SG) is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

CHRYSALIS INVESTMENTS LTD

Risk-Adjusted Performance

Very Weak

Over the last 90 days CHRYSALIS INVESTMENTS LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile 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 CHRYSALIS INVESTMENTS

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

The idea behind HEALTHSTREAM and CHRYSALIS INVESTMENTS LTD 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.