Correlation Between EHEALTH and Poste Italiane

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

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

Diversification Opportunities for EHEALTH and Poste Italiane

-0.74

Correlation Coefficient

EHEALTH  Poste Italiane

Pay attention - limited upside

The 3 months correlation between EHEALTH and Poste is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding EHEALTH and Poste Italiane SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Poste Italiane SpA and EHEALTH 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 EHEALTH are associated (or correlated) with Poste Italiane. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Poste Italiane SpA has no effect on the direction of EHEALTH i.e., EHEALTH and Poste Italiane go up and down completely randomly.

Pair Corralation between EHEALTH and Poste Italiane

Assuming the 90 days trading horizon EHEALTH is expected to under-perform the Poste Italiane. In addition to that, EHEALTH is 4.39 times more volatile than Poste Italiane SpA. It trades about -0.08 of its total potential returns per unit of risk. Poste Italiane SpA is currently generating about 0.36 per unit of volatility. If you would invest  1,354  in Poste Italiane SpA on December 29, 2024 and sell it today you would earn a total of  291.00  from holding Poste Italiane SpA or generate 21.49% return on investment over 90 days.

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

EHEALTH  vs.  Poste Italiane SpA

EHEALTH

Risk-Adjusted Performance

Very Weak

Over the last 90 days EHEALTH 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 basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Poste Italiane SpA

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Poste Italiane SpA are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Poste Italiane reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EHEALTH and Poste Italiane

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

The idea behind EHEALTH and Poste Italiane SpA 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.