Correlation Between CPSI Old and CareMax

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

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

Diversification Opportunities for CPSI Old and CareMax

0.18

Correlation Coefficient

CPSI Old  CareMax

Average diversification

The 3 months correlation between CPSI and CareMax is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding CPSI Old and CareMax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CareMax and CPSI Old 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 CPSI Old are associated (or correlated) with CareMax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CareMax has no effect on the direction of CPSI Old i.e., CPSI Old and CareMax go up and down completely randomly.

Pair Corralation between CPSI Old and CareMax

Given the investment horizon of 90 days CPSI Old is expected to generate 0.05 times more return on investment than CareMax. However, CPSI Old is 20.04 times less risky than CareMax. It trades about 0.02 of its potential returns per unit of risk. CareMax is currently generating about -0.05 per unit of risk. If you would invest  2,531  in CPSI Old on September 10, 2024 and sell it today you would earn a total of  2.00  from holding CPSI Old or generate 0.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	1.7%
Values	Daily Returns

CPSI Old  vs.  CareMax

CPSI Old

Risk-Adjusted Performance

0 of 100

Very Weak

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

CareMax

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CareMax has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with CPSI Old and CareMax

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

The idea behind CPSI Old and CareMax 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.