Correlation Between Cardinal Health and Alchemy Investments

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

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

Diversification Opportunities for Cardinal Health and Alchemy Investments

0.47

Correlation Coefficient

Cardinal Health  Alchemy Investments

Very weak diversification

The 3 months correlation between Cardinal and Alchemy is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and Alchemy Investments Acquisitio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alchemy Investments and Cardinal 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 Cardinal Health are associated (or correlated) with Alchemy Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alchemy Investments has no effect on the direction of Cardinal Health i.e., Cardinal Health and Alchemy Investments go up and down completely randomly.

Pair Corralation between Cardinal Health and Alchemy Investments

Considering the 90-day investment horizon Cardinal Health is expected to generate 0.92 times more return on investment than Alchemy Investments. However, Cardinal Health is 1.09 times less risky than Alchemy Investments. It trades about 0.06 of its potential returns per unit of risk. Alchemy Investments Acquisition is currently generating about 0.02 per unit of risk. If you would invest  11,133  in Cardinal Health on September 22, 2024 and sell it today you would earn a total of  567.00  from holding Cardinal Health or generate 5.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Cardinal Health  vs.  Alchemy Investments Acquisitio

Cardinal Health

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cardinal Health are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Cardinal Health is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Alchemy Investments

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alchemy Investments Acquisition are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, Alchemy Investments is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cardinal Health and Alchemy Investments

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

The idea behind Cardinal Health and Alchemy Investments Acquisition 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.