Correlation Between Induction Healthcare and Ocean Harvest

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

By analyzing existing cross correlation between Induction Healthcare Group and Ocean Harvest Technology, you can compare the effects of market volatilities on Induction Healthcare and Ocean Harvest 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 Induction Healthcare with a short position of Ocean Harvest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Induction Healthcare and Ocean Harvest.

Diversification Opportunities for Induction Healthcare and Ocean Harvest

-0.77

Correlation Coefficient

Induction Healthcare  Ocean Harvest

Pay attention - limited upside

The 3 months correlation between Induction and Ocean is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Induction Healthcare Group and Ocean Harvest Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ocean Harvest Technology and Induction Healthcare 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 Induction Healthcare Group are associated (or correlated) with Ocean Harvest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ocean Harvest Technology has no effect on the direction of Induction Healthcare i.e., Induction Healthcare and Ocean Harvest go up and down completely randomly.

Pair Corralation between Induction Healthcare and Ocean Harvest

Assuming the 90 days trading horizon Induction Healthcare Group is expected to under-perform the Ocean Harvest. In addition to that, Induction Healthcare is 1.22 times more volatile than Ocean Harvest Technology. It trades about -0.07 of its total potential returns per unit of risk. Ocean Harvest Technology is currently generating about 0.0 per unit of volatility. If you would invest  950.00  in Ocean Harvest Technology on September 20, 2024 and sell it today you would lose (100.00) from holding Ocean Harvest Technology or give up 10.53% of portfolio value over 90 days.

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

Induction Healthcare Group  vs.  Ocean Harvest Technology

Induction Healthcare

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Induction Healthcare Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Induction Healthcare unveiled solid returns over the last few months and may actually be approaching a breakup point.

Ocean Harvest Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ocean Harvest Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Induction Healthcare and Ocean Harvest

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

The idea behind Induction Healthcare Group and Ocean Harvest Technology 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.