Correlation Between Regional Health and Guardian Pharmacy

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

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

Diversification Opportunities for Regional Health and Guardian Pharmacy

-0.36

Correlation Coefficient

Regional Health  Guardian Pharmacy

Very good diversification

The 3 months correlation between Regional and Guardian is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Regional Health Properties and Guardian Pharmacy Services, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guardian Pharmacy and Regional 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 Regional Health Properties are associated (or correlated) with Guardian Pharmacy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guardian Pharmacy has no effect on the direction of Regional Health i.e., Regional Health and Guardian Pharmacy go up and down completely randomly.

Pair Corralation between Regional Health and Guardian Pharmacy

Assuming the 90 days trading horizon Regional Health Properties is expected to generate 27.44 times more return on investment than Guardian Pharmacy. However, Regional Health is 27.44 times more volatile than Guardian Pharmacy Services,. It trades about 0.13 of its potential returns per unit of risk. Guardian Pharmacy Services, is currently generating about 0.14 per unit of risk. If you would invest  440.00  in Regional Health Properties on September 28, 2024 and sell it today you would lose (409.00) from holding Regional Health Properties or give up 92.95% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	24.25%
Values	Daily Returns

Regional Health Properties  vs.  Guardian Pharmacy Services,

Regional Health Prop

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Regional Health Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Regional Health is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Guardian Pharmacy

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Guardian Pharmacy Services, are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Guardian Pharmacy displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Regional Health and Guardian Pharmacy

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

The idea behind Regional Health Properties and Guardian Pharmacy Services, 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.