Correlation Between Reliance Global and EHealth

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

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

Diversification Opportunities for Reliance Global and EHealth

-0.27

Correlation Coefficient

Reliance Global  EHealth

Very good diversification

The 3 months correlation between Reliance and EHealth is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Reliance Global Group and eHealth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eHealth and Reliance Global 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 Reliance Global Group 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 Reliance Global i.e., Reliance Global and EHealth go up and down completely randomly.

Pair Corralation between Reliance Global and EHealth

Assuming the 90 days horizon Reliance Global Group is expected to generate 7.04 times more return on investment than EHealth. However, Reliance Global is 7.04 times more volatile than eHealth. It trades about 0.06 of its potential returns per unit of risk. eHealth is currently generating about 0.19 per unit of risk. If you would invest  6.00  in Reliance Global Group on September 13, 2024 and sell it today you would lose (2.15) from holding Reliance Global Group or give up 35.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	54.69%
Values	Daily Returns

Reliance Global Group  vs.  eHealth

Reliance Global Group

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Reliance Global Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly abnormal forward indicators, Reliance Global showed solid returns over the last few months and may actually be approaching a breakup point.

eHealth

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in eHealth are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, EHealth demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Reliance Global and EHealth

The main advantage of trading using opposite Reliance Global and EHealth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reliance Global 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 Reliance Global Group 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.