Correlation Between Trellus Health and Worldwide Healthcare

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

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

Diversification Opportunities for Trellus Health and Worldwide Healthcare

-0.14

Correlation Coefficient

Trellus Health  Worldwide Healthcare

Good diversification

The 3 months correlation between Trellus and Worldwide is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Trellus Health plc and Worldwide Healthcare Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worldwide Healthcare and Trellus 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 Trellus Health plc are associated (or correlated) with Worldwide Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worldwide Healthcare has no effect on the direction of Trellus Health i.e., Trellus Health and Worldwide Healthcare go up and down completely randomly.

Pair Corralation between Trellus Health and Worldwide Healthcare

Assuming the 90 days trading horizon Trellus Health plc is expected to generate 43.55 times more return on investment than Worldwide Healthcare. However, Trellus Health is 43.55 times more volatile than Worldwide Healthcare Trust. It trades about 0.03 of its potential returns per unit of risk. Worldwide Healthcare Trust is currently generating about 0.01 per unit of risk. If you would invest  600.00  in Trellus Health plc on October 22, 2024 and sell it today you would lose (360.00) from holding Trellus Health plc or give up 60.0% of portfolio value over 90 days.

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

Trellus Health plc  vs.  Worldwide Healthcare Trust

Trellus Health plc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Trellus Health plc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Trellus Health unveiled solid returns over the last few months and may actually be approaching a breakup point.

Worldwide Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Trellus Health and Worldwide Healthcare

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

The idea behind Trellus Health plc and Worldwide Healthcare Trust 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.