Correlation Between HealthEquity and CPSI Old

Can any of the company-specific risk be diversified away by investing in both HealthEquity and CPSI Old 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 HealthEquity and CPSI Old into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HealthEquity and CPSI Old, you can compare the effects of market volatilities on HealthEquity and CPSI Old 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 HealthEquity with a short position of CPSI Old. Check out your portfolio center. Please also check ongoing floating volatility patterns of HealthEquity and CPSI Old.

Diversification Opportunities for HealthEquity and CPSI Old

-0.19

Correlation Coefficient

HealthEquity  CPSI Old

Good diversification

The 3 months correlation between HealthEquity and CPSI is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding HealthEquity and CPSI Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CPSI Old and HealthEquity 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 HealthEquity are associated (or correlated) with CPSI Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CPSI Old has no effect on the direction of HealthEquity i.e., HealthEquity and CPSI Old go up and down completely randomly.

Pair Corralation between HealthEquity and CPSI Old

If you would invest  7,863  in HealthEquity on August 31, 2024 and sell it today you would earn a total of  2,384  from holding HealthEquity or generate 30.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

HealthEquity  vs.  CPSI Old

HealthEquity

Risk-Adjusted Performance

15 of 100

Good

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

CPSI Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CPSI Old has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, CPSI Old is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with HealthEquity and CPSI Old

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

The idea behind HealthEquity and CPSI Old 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.