Correlation Between CloudMD Software and Cogstate

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

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

Diversification Opportunities for CloudMD Software and Cogstate

0.01

Correlation Coefficient

CloudMD Software  Cogstate

Significant diversification

The 3 months correlation between CloudMD and Cogstate is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding CloudMD Software Services and Cogstate Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogstate Limited and CloudMD Software 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 CloudMD Software Services are associated (or correlated) with Cogstate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cogstate Limited has no effect on the direction of CloudMD Software i.e., CloudMD Software and Cogstate go up and down completely randomly.

Pair Corralation between CloudMD Software and Cogstate

Assuming the 90 days horizon CloudMD Software Services is expected to under-perform the Cogstate. In addition to that, CloudMD Software is 2.44 times more volatile than Cogstate Limited. It trades about -0.01 of its total potential returns per unit of risk. Cogstate Limited is currently generating about -0.01 per unit of volatility. If you would invest  107.00  in Cogstate Limited on September 14, 2024 and sell it today you would lose (37.00) from holding Cogstate Limited or give up 34.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	72.52%
Values	Daily Returns

CloudMD Software Services  vs.  Cogstate Limited

CloudMD Software Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CloudMD Software Services has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, CloudMD Software is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Cogstate Limited

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cogstate Limited are ranked lower than 8 (%) 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.

Pair Trading with CloudMD Software and Cogstate

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

The idea behind CloudMD Software Services and Cogstate Limited 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.