Correlation Between Advanced Health and Auddia

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

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

Diversification Opportunities for Advanced Health and Auddia

0.7

Correlation Coefficient

Advanced Health  Auddia

Poor diversification

The 3 months correlation between Advanced and Auddia is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Health Intelligence and Auddia Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auddia Inc and Advanced Health 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 Advanced Health Intelligence are associated (or correlated) with Auddia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auddia Inc has no effect on the direction of Advanced Health i.e., Advanced Health and Auddia go up and down completely randomly.

Pair Corralation between Advanced Health and Auddia

Assuming the 90 days horizon Advanced Health Intelligence is expected to generate 0.59 times more return on investment than Auddia. However, Advanced Health Intelligence is 1.7 times less risky than Auddia. It trades about -0.02 of its potential returns per unit of risk. Auddia Inc is currently generating about -0.04 per unit of risk. If you would invest  0.50  in Advanced Health Intelligence on September 30, 2024 and sell it today you would lose (0.10) from holding Advanced Health Intelligence or give up 20.0% of portfolio value over 90 days.

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

Advanced Health Intelligence  vs.  Auddia Inc

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 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.

Auddia Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Auddia Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic 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 Advanced Health and Auddia

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

The idea behind Advanced Health Intelligence and Auddia Inc 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..