Correlation Between Streamline Health and Renalytix

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

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

Diversification Opportunities for Streamline Health and Renalytix

0.71

Correlation Coefficient

Streamline Health  Renalytix

Poor diversification

The 3 months correlation between Streamline and Renalytix is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Streamline Health Solutions and Renalytix AI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renalytix AI and Streamline 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 Streamline Health Solutions are associated (or correlated) with Renalytix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renalytix AI has no effect on the direction of Streamline Health i.e., Streamline Health and Renalytix go up and down completely randomly.

Pair Corralation between Streamline Health and Renalytix

Given the investment horizon of 90 days Streamline Health Solutions is expected to under-perform the Renalytix. In addition to that, Streamline Health is 1.75 times more volatile than Renalytix AI. It trades about -0.08 of its total potential returns per unit of risk. Renalytix AI is currently generating about -0.12 per unit of volatility. If you would invest  28.00  in Renalytix AI on September 3, 2024 and sell it today you would lose (13.00) from holding Renalytix AI or give up 46.43% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Streamline Health Solutions  vs.  Renalytix AI

Streamline Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Streamline Health Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Renalytix AI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Renalytix AI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Streamline Health and Renalytix

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

The idea behind Streamline Health Solutions and Renalytix AI 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .