Correlation Between HEALTHSTREAM (HL5SG) and Pembina Pipeline

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

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

Diversification Opportunities for HEALTHSTREAM (HL5SG) and Pembina Pipeline

-0.29

Correlation Coefficient

HEALTHSTREAM (HL5SG)  Pembina Pipeline

Very good diversification

The 3 months correlation between HEALTHSTREAM and Pembina is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding HEALTHSTREAM and Pembina Pipeline Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pembina Pipeline Corp 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 Pembina Pipeline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pembina Pipeline Corp has no effect on the direction of HEALTHSTREAM (HL5SG) i.e., HEALTHSTREAM (HL5SG) and Pembina Pipeline go up and down completely randomly.

Pair Corralation between HEALTHSTREAM (HL5SG) and Pembina Pipeline

Assuming the 90 days trading horizon HEALTHSTREAM is expected to under-perform the Pembina Pipeline. But the stock apears to be less risky and, when comparing its historical volatility, HEALTHSTREAM is 1.1 times less risky than Pembina Pipeline. The stock trades about -0.06 of its potential returns per unit of risk. The Pembina Pipeline Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  3,468  in Pembina Pipeline Corp on December 25, 2024 and sell it today you would earn a total of  192.00  from holding Pembina Pipeline Corp or generate 5.54% return on investment over 90 days.

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

HEALTHSTREAM  vs.  Pembina Pipeline Corp

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.

Pembina Pipeline Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pembina Pipeline Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Pembina Pipeline may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with HEALTHSTREAM (HL5SG) and Pembina Pipeline

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

The idea behind HEALTHSTREAM and Pembina Pipeline Corp 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.