Correlation Between Viemed Healthcare and DISCOVERY

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

By analyzing existing cross correlation between Viemed Healthcare and DISCOVERY MUNICATIONS LLC, you can compare the effects of market volatilities on Viemed Healthcare and DISCOVERY 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 DISCOVERY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Viemed Healthcare and DISCOVERY.

Diversification Opportunities for Viemed Healthcare and DISCOVERY

0.12

Correlation Coefficient

Viemed Healthcare  DISCOVERY

Average diversification

The 3 months correlation between Viemed and DISCOVERY is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Viemed Healthcare and DISCOVERY MUNICATIONS LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DISCOVERY MUNICATIONS LLC 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 DISCOVERY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DISCOVERY MUNICATIONS LLC has no effect on the direction of Viemed Healthcare i.e., Viemed Healthcare and DISCOVERY go up and down completely randomly.

Pair Corralation between Viemed Healthcare and DISCOVERY

Considering the 90-day investment horizon Viemed Healthcare is expected to under-perform the DISCOVERY. In addition to that, Viemed Healthcare is 14.95 times more volatile than DISCOVERY MUNICATIONS LLC. It trades about -0.21 of its total potential returns per unit of risk. DISCOVERY MUNICATIONS LLC is currently generating about -0.05 per unit of volatility. If you would invest  9,976  in DISCOVERY MUNICATIONS LLC on October 9, 2024 and sell it today you would lose (12.00) from holding DISCOVERY MUNICATIONS LLC or give up 0.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Viemed Healthcare  vs.  DISCOVERY MUNICATIONS LLC

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.

DISCOVERY MUNICATIONS LLC

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Viemed Healthcare and DISCOVERY

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

The idea behind Viemed Healthcare and DISCOVERY MUNICATIONS LLC 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.