Correlation Between SERI INDUSTRIAL and EHEALTH

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

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

Diversification Opportunities for SERI INDUSTRIAL and EHEALTH

-0.56

Correlation Coefficient

SERI INDUSTRIAL  EHEALTH

Excellent diversification

The 3 months correlation between SERI and EHEALTH is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding SERI INDUSTRIAL EO and EHEALTH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EHEALTH and SERI INDUSTRIAL 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 SERI INDUSTRIAL EO are associated (or correlated) with EHEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EHEALTH has no effect on the direction of SERI INDUSTRIAL i.e., SERI INDUSTRIAL and EHEALTH go up and down completely randomly.

Pair Corralation between SERI INDUSTRIAL and EHEALTH

Assuming the 90 days trading horizon SERI INDUSTRIAL EO is expected to under-perform the EHEALTH. But the stock apears to be less risky and, when comparing its historical volatility, SERI INDUSTRIAL EO is 1.52 times less risky than EHEALTH. The stock trades about -0.04 of its potential returns per unit of risk. The EHEALTH is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  431.00  in EHEALTH on September 22, 2024 and sell it today you would earn a total of  348.00  from holding EHEALTH or generate 80.74% return on investment over 90 days.

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

SERI INDUSTRIAL EO  vs.  EHEALTH

SERI INDUSTRIAL EO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SERI INDUSTRIAL EO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's technical 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.

EHEALTH

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in EHEALTH are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, EHEALTH exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SERI INDUSTRIAL and EHEALTH

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

The idea behind SERI INDUSTRIAL EO and EHEALTH 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.