Correlation Between Pinnacle Investment and Regis Healthcare

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

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

Diversification Opportunities for Pinnacle Investment and Regis Healthcare

0.47

Correlation Coefficient

Pinnacle Investment  Regis Healthcare

Very weak diversification

The 3 months correlation between Pinnacle and Regis is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Pinnacle Investment Management and Regis Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regis Healthcare and Pinnacle Investment 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 Pinnacle Investment Management are associated (or correlated) with Regis Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regis Healthcare has no effect on the direction of Pinnacle Investment i.e., Pinnacle Investment and Regis Healthcare go up and down completely randomly.

Pair Corralation between Pinnacle Investment and Regis Healthcare

Assuming the 90 days trading horizon Pinnacle Investment Management is expected to generate 1.04 times more return on investment than Regis Healthcare. However, Pinnacle Investment is 1.04 times more volatile than Regis Healthcare. It trades about 0.01 of its potential returns per unit of risk. Regis Healthcare is currently generating about 0.01 per unit of risk. If you would invest  2,344  in Pinnacle Investment Management on November 29, 2024 and sell it today you would lose (6.00) from holding Pinnacle Investment Management or give up 0.26% of portfolio value over 90 days.

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

Pinnacle Investment Management  vs.  Regis Healthcare

Pinnacle Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pinnacle Investment Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, Pinnacle Investment is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Regis Healthcare

Risk-Adjusted Performance

Very Weak

Over the last 90 days Regis Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Regis Healthcare is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Pinnacle Investment and Regis Healthcare

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

The idea behind Pinnacle Investment Management and Regis Healthcare 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.