Correlation Between HEALTHSTREAM (HL5SG) and Hapag-Lloyd

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

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

Diversification Opportunities for HEALTHSTREAM (HL5SG) and Hapag-Lloyd

0.04

Correlation Coefficient

HEALTHSTREAM (HL5SG)  Hapag-Lloyd

Significant diversification

The 3 months correlation between HEALTHSTREAM and Hapag-Lloyd is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding HEALTHSTREAM and Hapag Lloyd AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hapag Lloyd AG 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 Hapag-Lloyd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hapag Lloyd AG has no effect on the direction of HEALTHSTREAM (HL5SG) i.e., HEALTHSTREAM (HL5SG) and Hapag-Lloyd go up and down completely randomly.

Pair Corralation between HEALTHSTREAM (HL5SG) and Hapag-Lloyd

Assuming the 90 days trading horizon HEALTHSTREAM is expected to generate 0.53 times more return on investment than Hapag-Lloyd. However, HEALTHSTREAM is 1.88 times less risky than Hapag-Lloyd. It trades about 0.06 of its potential returns per unit of risk. Hapag Lloyd AG is currently generating about 0.02 per unit of risk. If you would invest  2,429  in HEALTHSTREAM on October 9, 2024 and sell it today you would earn a total of  611.00  from holding HEALTHSTREAM or generate 25.15% return on investment over 90 days.

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

HEALTHSTREAM  vs.  Hapag Lloyd AG

HEALTHSTREAM (HL5SG)

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in HEALTHSTREAM are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, HEALTHSTREAM (HL5SG) unveiled solid returns over the last few months and may actually be approaching a breakup point.

Hapag Lloyd AG

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hapag Lloyd AG are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Hapag-Lloyd reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HEALTHSTREAM (HL5SG) and Hapag-Lloyd

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

The idea behind HEALTHSTREAM and Hapag Lloyd AG 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.