Correlation Between Premier and Health Catalyst

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

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

Diversification Opportunities for Premier and Health Catalyst

0.65

Correlation Coefficient

Premier  Health Catalyst

Poor diversification

The 3 months correlation between Premier and Health is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Premier and Health Catalyst in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Health Catalyst and Premier 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 Premier are associated (or correlated) with Health Catalyst. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Health Catalyst has no effect on the direction of Premier i.e., Premier and Health Catalyst go up and down completely randomly.

Pair Corralation between Premier and Health Catalyst

Given the investment horizon of 90 days Premier is expected to generate 0.61 times more return on investment than Health Catalyst. However, Premier is 1.65 times less risky than Health Catalyst. It trades about -0.05 of its potential returns per unit of risk. Health Catalyst is currently generating about -0.16 per unit of risk. If you would invest  2,095  in Premier on December 29, 2024 and sell it today you would lose (176.00) from holding Premier or give up 8.4% of portfolio value over 90 days.

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

Premier  vs.  Health Catalyst

Premier

Risk-Adjusted Performance

Very Weak

Over the last 90 days Premier has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Health Catalyst

Risk-Adjusted Performance

Very Weak

Over the last 90 days Health Catalyst has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Premier and Health Catalyst

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

The idea behind Premier and Health Catalyst 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.

Check out your portfolio center.

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.