Correlation Between Helius Medical and Development Technologies

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

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

Diversification Opportunities for Helius Medical and Development Technologies

0.71

Correlation Coefficient

Helius Medical  Development Technologies

Poor diversification

The 3 months correlation between Helius and Development is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Helius Medical Technologies and Development Technologies Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Development Technologies and Helius Medical 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 Helius Medical Technologies are associated (or correlated) with Development Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Development Technologies has no effect on the direction of Helius Medical i.e., Helius Medical and Development Technologies go up and down completely randomly.

Pair Corralation between Helius Medical and Development Technologies

Given the investment horizon of 90 days Helius Medical Technologies is expected to generate 2.09 times more return on investment than Development Technologies. However, Helius Medical is 2.09 times more volatile than Development Technologies Corp. It trades about 0.14 of its potential returns per unit of risk. Development Technologies Corp is currently generating about 0.22 per unit of risk. If you would invest  49.00  in Helius Medical Technologies on October 14, 2024 and sell it today you would earn a total of  16.00  from holding Helius Medical Technologies or generate 32.65% return on investment over 90 days.

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

Helius Medical Technologies  vs.  Development Technologies Corp

Helius Medical Techn

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Helius Medical Technologies are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, Helius Medical unveiled solid returns over the last few months and may actually be approaching a breakup point.

Development Technologies

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Development Technologies Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Development Technologies exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Helius Medical and Development Technologies

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

The idea behind Helius Medical Technologies and Development Technologies 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.

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 Bonds Directory module to find actively traded corporate debentures issued by US companies.