Correlation Between Reliq Health and CVS HEALTH

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

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

Diversification Opportunities for Reliq Health and CVS HEALTH

0.0

Correlation Coefficient

Reliq Health  CVS HEALTH

Pay attention - limited upside

The 3 months correlation between Reliq and CVS is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Reliq Health Technologies and CVS HEALTH CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS HEALTH CDR and Reliq 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 Reliq Health Technologies are associated (or correlated) with CVS HEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVS HEALTH CDR has no effect on the direction of Reliq Health i.e., Reliq Health and CVS HEALTH go up and down completely randomly.

Pair Corralation between Reliq Health and CVS HEALTH

Assuming the 90 days horizon Reliq Health Technologies is expected to under-perform the CVS HEALTH. In addition to that, Reliq Health is 1.74 times more volatile than CVS HEALTH CDR. It trades about -0.05 of its total potential returns per unit of risk. CVS HEALTH CDR is currently generating about -0.03 per unit of volatility. If you would invest  1,808  in CVS HEALTH CDR on September 12, 2024 and sell it today you would lose (434.00) from holding CVS HEALTH CDR or give up 24.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Reliq Health Technologies  vs.  CVS HEALTH CDR

Reliq Health Technologies

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Reliq Health Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Reliq Health is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

CVS HEALTH CDR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CVS HEALTH CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, CVS HEALTH is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Reliq Health and CVS HEALTH

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

The idea behind Reliq Health Technologies and CVS HEALTH CDR 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.