Correlation Between Harrow Health and Sachem Capital

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

By analyzing existing cross correlation between Harrow Health 8625 and Sachem Capital Corp, you can compare the effects of market volatilities on Harrow Health and Sachem Capital 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 Harrow Health with a short position of Sachem Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harrow Health and Sachem Capital.

Diversification Opportunities for Harrow Health and Sachem Capital

0.45

Correlation Coefficient

Harrow Health  Sachem Capital

Very weak diversification

The 3 months correlation between Harrow and Sachem is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Harrow Health 8625 and Sachem Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sachem Capital Corp and Harrow Health 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 Harrow Health 8625 are associated (or correlated) with Sachem Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sachem Capital Corp has no effect on the direction of Harrow Health i.e., Harrow Health and Sachem Capital go up and down completely randomly.

Pair Corralation between Harrow Health and Sachem Capital

Assuming the 90 days horizon Harrow Health is expected to generate 1.02 times less return on investment than Sachem Capital. But when comparing it to its historical volatility, Harrow Health 8625 is 2.04 times less risky than Sachem Capital. It trades about 0.14 of its potential returns per unit of risk. Sachem Capital Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,418  in Sachem Capital Corp on December 28, 2024 and sell it today you would earn a total of  59.00  from holding Sachem Capital Corp or generate 2.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Harrow Health 8625  vs.  Sachem Capital Corp

Harrow Health 8625

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Harrow Health 8625 are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Harrow Health is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Sachem Capital Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sachem Capital Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Sachem Capital is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Harrow Health and Sachem Capital

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

The idea behind Harrow Health 8625 and Sachem Capital 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.