Correlation Between Amedisys and Surgery Partners

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

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

Diversification Opportunities for Amedisys and Surgery Partners

0.85

Correlation Coefficient

Amedisys  Surgery Partners

Very poor diversification

The 3 months correlation between Amedisys and Surgery is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Amedisys and Surgery Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Surgery Partners and Amedisys 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 Amedisys are associated (or correlated) with Surgery Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Surgery Partners has no effect on the direction of Amedisys i.e., Amedisys and Surgery Partners go up and down completely randomly.

Pair Corralation between Amedisys and Surgery Partners

Given the investment horizon of 90 days Amedisys is expected to generate 0.25 times more return on investment than Surgery Partners. However, Amedisys is 3.95 times less risky than Surgery Partners. It trades about -0.15 of its potential returns per unit of risk. Surgery Partners is currently generating about -0.16 per unit of risk. If you would invest  9,801  in Amedisys on August 30, 2024 and sell it today you would lose (678.00) from holding Amedisys or give up 6.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Amedisys  vs.  Surgery Partners

Amedisys

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amedisys has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Surgery Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Surgery Partners has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Amedisys and Surgery Partners

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

The idea behind Amedisys and Surgery Partners 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.