Correlation Between Symbotic and Absolute Health

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

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

Diversification Opportunities for Symbotic and Absolute Health

0.46

Correlation Coefficient

Symbotic  Absolute Health

Very weak diversification

The 3 months correlation between Symbotic and Absolute is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Symbotic and Absolute Health and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Absolute Health and Symbotic 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 Symbotic are associated (or correlated) with Absolute Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Absolute Health has no effect on the direction of Symbotic i.e., Symbotic and Absolute Health go up and down completely randomly.

Pair Corralation between Symbotic and Absolute Health

Considering the 90-day investment horizon Symbotic is expected to under-perform the Absolute Health. But the stock apears to be less risky and, when comparing its historical volatility, Symbotic is 23.16 times less risky than Absolute Health. The stock trades about -0.01 of its potential returns per unit of risk. The Absolute Health and is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Absolute Health and on December 29, 2024 and sell it today you would earn a total of  0.01  from holding Absolute Health and or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.31%
Values	Daily Returns

Symbotic  vs.  Absolute Health and

Symbotic

Risk-Adjusted Performance

Very Weak

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

Absolute Health

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Absolute Health and are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical and fundamental indicators, Absolute Health demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Symbotic and Absolute Health

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

The idea behind Symbotic and Absolute Health and 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.