Correlation Between HEALTHSTREAM (HL5SG) and COMBA TELECOM

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

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

Diversification Opportunities for HEALTHSTREAM (HL5SG) and COMBA TELECOM

-0.66

Correlation Coefficient

HEALTHSTREAM (HL5SG)  COMBA TELECOM

Excellent diversification

The 3 months correlation between HEALTHSTREAM and COMBA is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding HEALTHSTREAM and COMBA TELECOM SYST in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COMBA TELECOM SYST 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 COMBA TELECOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COMBA TELECOM SYST has no effect on the direction of HEALTHSTREAM (HL5SG) i.e., HEALTHSTREAM (HL5SG) and COMBA TELECOM go up and down completely randomly.

Pair Corralation between HEALTHSTREAM (HL5SG) and COMBA TELECOM

Assuming the 90 days trading horizon HEALTHSTREAM is expected to under-perform the COMBA TELECOM. But the stock apears to be less risky and, when comparing its historical volatility, HEALTHSTREAM is 2.61 times less risky than COMBA TELECOM. The stock trades about -0.06 of its potential returns per unit of risk. The COMBA TELECOM SYST is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  15.00  in COMBA TELECOM SYST on December 25, 2024 and sell it today you would earn a total of  7.00  from holding COMBA TELECOM SYST or generate 46.67% return on investment over 90 days.

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

HEALTHSTREAM  vs.  COMBA TELECOM SYST

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.

COMBA TELECOM SYST

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in COMBA TELECOM SYST are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, COMBA TELECOM unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HEALTHSTREAM (HL5SG) and COMBA TELECOM

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

The idea behind HEALTHSTREAM and COMBA TELECOM SYST 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.