Correlation Between Cogstate and Healthcare Integrated

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

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

Diversification Opportunities for Cogstate and Healthcare Integrated

-0.06

Correlation Coefficient

Cogstate  Healthcare Integrated

Good diversification

The 3 months correlation between Cogstate and Healthcare is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Cogstate Limited and Healthcare Integrated Technolo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthcare Integrated and Cogstate 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 Cogstate Limited are associated (or correlated) with Healthcare Integrated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Healthcare Integrated has no effect on the direction of Cogstate i.e., Cogstate and Healthcare Integrated go up and down completely randomly.

Pair Corralation between Cogstate and Healthcare Integrated

Assuming the 90 days horizon Cogstate is expected to generate 2.75 times less return on investment than Healthcare Integrated. But when comparing it to its historical volatility, Cogstate Limited is 3.54 times less risky than Healthcare Integrated. It trades about 0.12 of its potential returns per unit of risk. Healthcare Integrated Technologies is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  8.50  in Healthcare Integrated Technologies on September 5, 2024 and sell it today you would earn a total of  2.50  from holding Healthcare Integrated Technologies or generate 29.41% return on investment over 90 days.

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

Cogstate Limited  vs.  Healthcare Integrated Technolo

Cogstate Limited

Risk-Adjusted Performance

9 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cogstate Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Cogstate reported solid returns over the last few months and may actually be approaching a breakup point.

Healthcare Integrated

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Healthcare Integrated Technologies are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Healthcare Integrated exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cogstate and Healthcare Integrated

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

The idea behind Cogstate Limited and Healthcare Integrated Technologies 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.