Correlation Between Wearable Health and Predictive Oncology

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

By analyzing existing cross correlation between Wearable Health Solutions and Predictive Oncology, you can compare the effects of market volatilities on Wearable Health and Predictive Oncology 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 Wearable Health with a short position of Predictive Oncology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wearable Health and Predictive Oncology.

Diversification Opportunities for Wearable Health and Predictive Oncology

0.0

Correlation Coefficient

Wearable Health  Predictive Oncology

Pay attention - limited upside

The 3 months correlation between Wearable and Predictive is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Wearable Health Solutions and Predictive Oncology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Predictive Oncology and Wearable 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 Wearable Health Solutions are associated (or correlated) with Predictive Oncology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Predictive Oncology has no effect on the direction of Wearable Health i.e., Wearable Health and Predictive Oncology go up and down completely randomly.

Pair Corralation between Wearable Health and Predictive Oncology

Given the investment horizon of 90 days Wearable Health Solutions is expected to generate 1.58 times more return on investment than Predictive Oncology. However, Wearable Health is 1.58 times more volatile than Predictive Oncology. It trades about 0.01 of its potential returns per unit of risk. Predictive Oncology is currently generating about -0.02 per unit of risk. If you would invest  0.40  in Wearable Health Solutions on September 5, 2024 and sell it today you would lose (0.39) from holding Wearable Health Solutions or give up 97.5% of portfolio value over 90 days.

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

Wearable Health Solutions  vs.  Predictive Oncology

Wearable Health Solutions

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Wearable Health Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Wearable Health is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Predictive Oncology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Predictive Oncology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Predictive Oncology is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Wearable Health and Predictive Oncology

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

The idea behind Wearable Health Solutions and Predictive Oncology 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.