Correlation Between SIMON and Viemed Healthcare

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

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

Diversification Opportunities for SIMON and Viemed Healthcare

0.37

Correlation Coefficient

SIMON  Viemed Healthcare

Weak diversification

The 3 months correlation between SIMON and Viemed is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding SIMON PPTY GROUP and Viemed Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viemed Healthcare and SIMON 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 SIMON PPTY GROUP are associated (or correlated) with Viemed Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viemed Healthcare has no effect on the direction of SIMON i.e., SIMON and Viemed Healthcare go up and down completely randomly.

Pair Corralation between SIMON and Viemed Healthcare

Assuming the 90 days trading horizon SIMON PPTY GROUP is expected to generate 0.09 times more return on investment than Viemed Healthcare. However, SIMON PPTY GROUP is 11.48 times less risky than Viemed Healthcare. It trades about -0.04 of its potential returns per unit of risk. Viemed Healthcare is currently generating about -0.19 per unit of risk. If you would invest  9,923  in SIMON PPTY GROUP on October 10, 2024 and sell it today you would lose (15.00) from holding SIMON PPTY GROUP or give up 0.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

SIMON PPTY GROUP  vs.  Viemed Healthcare

SIMON PPTY GROUP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SIMON PPTY GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SIMON is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Viemed Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with SIMON and Viemed Healthcare

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

The idea behind SIMON PPTY GROUP and Viemed Healthcare 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.