Correlation Between WELL Health and Postmedia Network

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

By analyzing existing cross correlation between WELL Health Technologies and Postmedia Network Canada, you can compare the effects of market volatilities on WELL Health and Postmedia Network 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 WELL Health with a short position of Postmedia Network. Check out your portfolio center. Please also check ongoing floating volatility patterns of WELL Health and Postmedia Network.

Diversification Opportunities for WELL Health and Postmedia Network

-0.67

Correlation Coefficient

WELL Health  Postmedia Network

Excellent diversification

The 3 months correlation between WELL and Postmedia is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding WELL Health Technologies and Postmedia Network Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Postmedia Network Canada and WELL 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 WELL Health Technologies are associated (or correlated) with Postmedia Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Postmedia Network Canada has no effect on the direction of WELL Health i.e., WELL Health and Postmedia Network go up and down completely randomly.

Pair Corralation between WELL Health and Postmedia Network

Assuming the 90 days trading horizon WELL Health Technologies is expected to generate 1.46 times more return on investment than Postmedia Network. However, WELL Health is 1.46 times more volatile than Postmedia Network Canada. It trades about 0.06 of its potential returns per unit of risk. Postmedia Network Canada is currently generating about -0.02 per unit of risk. If you would invest  677.00  in WELL Health Technologies on October 11, 2024 and sell it today you would earn a total of  14.00  from holding WELL Health Technologies or generate 2.07% return on investment over 90 days.

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

WELL Health Technologies  vs.  Postmedia Network Canada

WELL Health Technologies

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in WELL Health Technologies are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, WELL Health displayed solid returns over the last few months and may actually be approaching a breakup point.

Postmedia Network Canada

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Postmedia Network Canada has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Postmedia Network is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with WELL Health and Postmedia Network

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

The idea behind WELL Health Technologies and Postmedia Network Canada 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.