Correlation Between Advanced Health and Aware

Can any of the company-specific risk be diversified away by investing in both Advanced Health and Aware 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 Aware 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 Aware Inc, you can compare the effects of market volatilities on Advanced Health and Aware 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 Aware. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Health and Aware.

Diversification Opportunities for Advanced Health and Aware

0.89

Correlation Coefficient

Advanced Health  Aware

Very poor diversification

The 3 months correlation between Advanced and Aware is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Health Intelligence and Aware Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aware 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 Aware. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aware Inc has no effect on the direction of Advanced Health i.e., Advanced Health and Aware go up and down completely randomly.

Pair Corralation between Advanced Health and Aware

Assuming the 90 days horizon Advanced Health Intelligence is expected to under-perform the Aware. But the otc stock apears to be less risky and, when comparing its historical volatility, Advanced Health Intelligence is 1.06 times less risky than Aware. The otc stock trades about -0.18 of its potential returns per unit of risk. The Aware Inc is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  187.00  in Aware Inc on September 28, 2024 and sell it today you would lose (34.00) from holding Aware Inc or give up 18.18% of portfolio value over 90 days.

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

Advanced Health Intelligence  vs.  Aware 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.

Aware Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aware 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 Aware

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

The idea behind Advanced Health Intelligence and Aware 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.