Correlation Between East Coast and Healthlead Public

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

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

Diversification Opportunities for East Coast and Healthlead Public

-0.41

Correlation Coefficient

East Coast  Healthlead Public

Very good diversification

The 3 months correlation between East and Healthlead is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding East Coast Furnitech and Healthlead Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthlead Public and East Coast 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 East Coast Furnitech are associated (or correlated) with Healthlead Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Healthlead Public has no effect on the direction of East Coast i.e., East Coast and Healthlead Public go up and down completely randomly.

Pair Corralation between East Coast and Healthlead Public

Assuming the 90 days trading horizon East Coast Furnitech is expected to under-perform the Healthlead Public. In addition to that, East Coast is 1.18 times more volatile than Healthlead Public. It trades about -0.16 of its total potential returns per unit of risk. Healthlead Public is currently generating about 0.11 per unit of volatility. If you would invest  870.00  in Healthlead Public on October 1, 2024 and sell it today you would earn a total of  150.00  from holding Healthlead Public or generate 17.24% return on investment over 90 days.

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

East Coast Furnitech  vs.  Healthlead Public

East Coast Furnitech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days East Coast Furnitech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Healthlead Public

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Healthlead Public are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental drivers, Healthlead Public disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with East Coast and Healthlead Public

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

The idea behind East Coast Furnitech and Healthlead Public 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.