Correlation Between Workforce Holdings and Ascendis Health

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

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

Diversification Opportunities for Workforce Holdings and Ascendis Health

-0.16

Correlation Coefficient

Workforce Holdings  Ascendis Health

Good diversification

The 3 months correlation between Workforce and Ascendis is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Workforce Holdings and Ascendis Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ascendis Health and Workforce Holdings 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 Workforce Holdings are associated (or correlated) with Ascendis Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ascendis Health has no effect on the direction of Workforce Holdings i.e., Workforce Holdings and Ascendis Health go up and down completely randomly.

Pair Corralation between Workforce Holdings and Ascendis Health

Assuming the 90 days trading horizon Workforce Holdings is expected to generate 1.2 times less return on investment than Ascendis Health. In addition to that, Workforce Holdings is 1.25 times more volatile than Ascendis Health. It trades about 0.03 of its total potential returns per unit of risk. Ascendis Health is currently generating about 0.05 per unit of volatility. If you would invest  6,800  in Ascendis Health on September 24, 2024 and sell it today you would earn a total of  2,200  from holding Ascendis Health or generate 32.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.65%
Values	Daily Returns

Workforce Holdings  vs.  Ascendis Health

Workforce Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Workforce Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Ascendis Health

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ascendis Health are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Ascendis Health exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Workforce Holdings and Ascendis Health

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

The idea behind Workforce Holdings and Ascendis Health 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.