Correlation Between Sare Holding and CVS Health

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

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

Diversification Opportunities for Sare Holding and CVS Health

0.0

Correlation Coefficient

Sare Holding  CVS Health

Pay attention - limited upside

The 3 months correlation between Sare and CVS is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Sare Holding SAB and CVS Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health and Sare Holding 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 Sare Holding SAB 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 has no effect on the direction of Sare Holding i.e., Sare Holding and CVS Health go up and down completely randomly.

Pair Corralation between Sare Holding and CVS Health

If you would invest  89,912  in CVS Health on October 27, 2024 and sell it today you would earn a total of  20,288  from holding CVS Health or generate 22.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

Sare Holding SAB  vs.  CVS Health

Sare Holding SAB

Risk-Adjusted Performance

0 of 100

Very Weak

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

CVS Health

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Sare Holding and CVS Health

The main advantage of trading using opposite Sare Holding and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sare Holding 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 Sare Holding SAB and CVS Health 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.