Correlation Between Regional Health and Oncology Institute

Can any of the company-specific risk be diversified away by investing in both Regional Health and Oncology Institute 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 Oncology Institute 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 The Oncology Institute, you can compare the effects of market volatilities on Regional Health and Oncology Institute 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 Oncology Institute. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regional Health and Oncology Institute.

Diversification Opportunities for Regional Health and Oncology Institute

0.43

Correlation Coefficient

Regional Health  Oncology Institute

Very weak diversification

The 3 months correlation between Regional and Oncology is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Regional Health Properties and The Oncology Institute in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Oncology Institute 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 Oncology Institute. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Oncology Institute has no effect on the direction of Regional Health i.e., Regional Health and Oncology Institute go up and down completely randomly.

Pair Corralation between Regional Health and Oncology Institute

Assuming the 90 days trading horizon Regional Health Properties is expected to generate 1.09 times more return on investment than Oncology Institute. However, Regional Health is 1.09 times more volatile than The Oncology Institute. It trades about 0.13 of its potential returns per unit of risk. The Oncology Institute is currently generating about 0.1 per unit of risk. If you would invest  361.00  in Regional Health Properties on October 21, 2024 and sell it today you would lose (283.00) from holding Regional Health Properties or give up 78.39% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	72.23%
Values	Daily Returns

Regional Health Properties  vs.  The Oncology Institute

Regional Health Prop

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Regional Health Properties are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady technical and fundamental indicators, Regional Health sustained solid returns over the last few months and may actually be approaching a breakup point.

The Oncology Institute

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The Oncology Institute are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent forward indicators, Oncology Institute showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Regional Health and Oncology Institute

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

The idea behind Regional Health Properties and The Oncology Institute 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.