Correlation Between Eddy Smart and NeuPath Health

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

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

Diversification Opportunities for Eddy Smart and NeuPath Health

-0.62

Correlation Coefficient

Eddy Smart  NeuPath Health

Excellent diversification

The 3 months correlation between Eddy and NeuPath is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Eddy Smart Home and NeuPath Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NeuPath Health and Eddy Smart 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 Eddy Smart Home are associated (or correlated) with NeuPath Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NeuPath Health has no effect on the direction of Eddy Smart i.e., Eddy Smart and NeuPath Health go up and down completely randomly.

Pair Corralation between Eddy Smart and NeuPath Health

Assuming the 90 days horizon Eddy Smart Home is expected to under-perform the NeuPath Health. In addition to that, Eddy Smart is 1.09 times more volatile than NeuPath Health. It trades about -0.14 of its total potential returns per unit of risk. NeuPath Health is currently generating about 0.06 per unit of volatility. If you would invest  18.00  in NeuPath Health on September 23, 2024 and sell it today you would earn a total of  2.00  from holding NeuPath Health or generate 11.11% return on investment over 90 days.

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

Eddy Smart Home  vs.  NeuPath Health

Eddy Smart Home

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eddy Smart Home has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

NeuPath Health

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NeuPath Health are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, NeuPath Health showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eddy Smart and NeuPath Health

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

The idea behind Eddy Smart Home and NeuPath Health 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.