Correlation Between Tabula Rasa and EGF Theramed

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

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

Diversification Opportunities for Tabula Rasa and EGF Theramed

0.08

Correlation Coefficient

Tabula Rasa  EGF Theramed

Significant diversification

The 3 months correlation between Tabula and EGF is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Tabula Rasa HealthCare and EGF Theramed Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EGF Theramed Health and Tabula Rasa 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 Tabula Rasa HealthCare are associated (or correlated) with EGF Theramed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EGF Theramed Health has no effect on the direction of Tabula Rasa i.e., Tabula Rasa and EGF Theramed go up and down completely randomly.

Pair Corralation between Tabula Rasa and EGF Theramed

If you would invest  6.80  in EGF Theramed Health on October 22, 2024 and sell it today you would earn a total of  12.20  from holding EGF Theramed Health or generate 179.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	5.56%
Values	Daily Returns

Tabula Rasa HealthCare  vs.  EGF Theramed Health

Tabula Rasa HealthCare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tabula Rasa HealthCare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical indicators, Tabula Rasa is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

EGF Theramed Health

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in EGF Theramed Health are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent technical indicators, EGF Theramed reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tabula Rasa and EGF Theramed

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

The idea behind Tabula Rasa HealthCare and EGF Theramed 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.