Correlation Between Viemed Healthcare and Eureka Acquisition

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

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

Diversification Opportunities for Viemed Healthcare and Eureka Acquisition

-0.48

Correlation Coefficient

Viemed Healthcare  Eureka Acquisition

Very good diversification

The 3 months correlation between Viemed and Eureka is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Viemed Healthcare and Eureka Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eureka Acquisition Corp and Viemed Healthcare 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 Viemed Healthcare are associated (or correlated) with Eureka Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eureka Acquisition Corp has no effect on the direction of Viemed Healthcare i.e., Viemed Healthcare and Eureka Acquisition go up and down completely randomly.

Pair Corralation between Viemed Healthcare and Eureka Acquisition

Considering the 90-day investment horizon Viemed Healthcare is expected to generate 182.52 times less return on investment than Eureka Acquisition. But when comparing it to its historical volatility, Viemed Healthcare is 44.6 times less risky than Eureka Acquisition. It trades about 0.03 of its potential returns per unit of risk. Eureka Acquisition Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Eureka Acquisition Corp on October 9, 2024 and sell it today you would earn a total of  1,016  from holding Eureka Acquisition Corp or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	33.2%
Values	Daily Returns

Viemed Healthcare  vs.  Eureka Acquisition Corp

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.

Eureka Acquisition Corp

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Eureka Acquisition Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Eureka Acquisition is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Viemed Healthcare and Eureka Acquisition

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

The idea behind Viemed Healthcare and Eureka Acquisition Corp 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.