Correlation Between Advanced Health and Red Branch

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

Diversification Opportunities for Advanced Health and Red Branch

0.0

Correlation Coefficient

Advanced Health  Red Branch

Pay attention - limited upside

The 3 months correlation between Advanced and Red is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Health Intelligence and Red Branch Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red Branch Technologies 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 Red Branch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red Branch Technologies has no effect on the direction of Advanced Health i.e., Advanced Health and Red Branch go up and down completely randomly.

Pair Corralation between Advanced Health and Red Branch

Assuming the 90 days horizon Advanced Health Intelligence is expected to generate 0.51 times more return on investment than Red Branch. However, Advanced Health Intelligence is 1.98 times less risky than Red Branch. It trades about -0.15 of its potential returns per unit of risk. Red Branch Technologies is currently generating about -0.15 per unit of risk. If you would invest  0.50  in Advanced Health Intelligence on September 27, 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	Flat
Strength	Insignificant
Accuracy	97.67%
Values	Daily Returns

Advanced Health Intelligence  vs.  Red Branch Technologies

Advanced Health Inte

Risk-Adjusted Performance

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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.

Red Branch Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Red Branch Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Advanced Health and Red Branch

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

The idea behind Advanced Health Intelligence and Red Branch Technologies 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.