Correlation Between ProStar Holdings and Advanced Health

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

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

Diversification Opportunities for ProStar Holdings and Advanced Health

0.64

Correlation Coefficient

ProStar Holdings  Advanced Health

Poor diversification

The 3 months correlation between ProStar and Advanced is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding ProStar Holdings and Advanced Health Intelligence in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Health Inte and ProStar Holdings 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 ProStar Holdings are associated (or correlated) with Advanced Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Health Inte has no effect on the direction of ProStar Holdings i.e., ProStar Holdings and Advanced Health go up and down completely randomly.

Pair Corralation between ProStar Holdings and Advanced Health

Assuming the 90 days horizon ProStar Holdings is expected to generate 99.52 times less return on investment than Advanced Health. But when comparing it to its historical volatility, ProStar Holdings is 14.77 times less risky than Advanced Health. It trades about 0.02 of its potential returns per unit of risk. Advanced Health Intelligence is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  5.00  in Advanced Health Intelligence on September 3, 2024 and sell it today you would lose (4.60) from holding Advanced Health Intelligence or give up 92.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	85.89%
Values	Daily Returns

ProStar Holdings  vs.  Advanced Health Intelligence

ProStar Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProStar Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Advanced Health Inte

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Advanced Health Intelligence has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with ProStar Holdings and Advanced Health

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

The idea behind ProStar Holdings and Advanced Health Intelligence 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.