Correlation Between HealthStream and DATATRAK International

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

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

Diversification Opportunities for HealthStream and DATATRAK International

0.0

Correlation Coefficient

HealthStream  DATATRAK International

Pay attention - limited upside

The 3 months correlation between HealthStream and DATATRAK is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding HealthStream and DATATRAK International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DATATRAK International and HealthStream 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 DATATRAK International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DATATRAK International has no effect on the direction of HealthStream i.e., HealthStream and DATATRAK International go up and down completely randomly.

Pair Corralation between HealthStream and DATATRAK International

If you would invest  2,901  in HealthStream on September 5, 2024 and sell it today you would earn a total of  394.00  from holding HealthStream or generate 13.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

HealthStream  vs.  DATATRAK International

HealthStream

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in HealthStream are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, HealthStream displayed solid returns over the last few months and may actually be approaching a breakup point.

DATATRAK International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DATATRAK International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, DATATRAK International is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with HealthStream and DATATRAK International

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

The idea behind HealthStream and DATATRAK International 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.