Correlation Between Helius Medical and Investec

Can any of the company-specific risk be diversified away by investing in both Helius Medical and Investec 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 Investec 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 Investec Ltd ADR, you can compare the effects of market volatilities on Helius Medical and Investec 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 Investec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Helius Medical and Investec.

Diversification Opportunities for Helius Medical and Investec

-0.31

Correlation Coefficient

Helius Medical  Investec

Very good diversification

The 3 months correlation between Helius and Investec is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Helius Medical Technologies and Investec Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investec ADR 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 Investec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investec ADR has no effect on the direction of Helius Medical i.e., Helius Medical and Investec go up and down completely randomly.

Pair Corralation between Helius Medical and Investec

Given the investment horizon of 90 days Helius Medical Technologies is expected to generate 2.01 times more return on investment than Investec. However, Helius Medical is 2.01 times more volatile than Investec Ltd ADR. It trades about 0.23 of its potential returns per unit of risk. Investec Ltd ADR is currently generating about 0.01 per unit of risk. If you would invest  45.00  in Helius Medical Technologies on September 23, 2024 and sell it today you would earn a total of  46.00  from holding Helius Medical Technologies or generate 102.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Helius Medical Technologies  vs.  Investec Ltd ADR

Helius Medical Techn

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Helius Medical Technologies are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent fundamental indicators, Helius Medical unveiled solid returns over the last few months and may actually be approaching a breakup point.

Investec ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Investec Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Investec is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Helius Medical and Investec

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

The idea behind Helius Medical Technologies and Investec Ltd ADR 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.