Correlation Between EHealth and Maiden Holdings

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

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

Diversification Opportunities for EHealth and Maiden Holdings

-0.64

Correlation Coefficient

EHealth  Maiden Holdings

Excellent diversification

The 3 months correlation between EHealth and Maiden is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding eHealth and Maiden Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maiden Holdings and EHealth 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 eHealth are associated (or correlated) with Maiden Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maiden Holdings has no effect on the direction of EHealth i.e., EHealth and Maiden Holdings go up and down completely randomly.

Pair Corralation between EHealth and Maiden Holdings

Given the investment horizon of 90 days eHealth is expected to generate 3.26 times more return on investment than Maiden Holdings. However, EHealth is 3.26 times more volatile than Maiden Holdings. It trades about 0.11 of its potential returns per unit of risk. Maiden Holdings is currently generating about 0.0 per unit of risk. If you would invest  460.00  in eHealth on September 27, 2024 and sell it today you would earn a total of  344.00  from holding eHealth or generate 74.78% return on investment over 90 days.

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

eHealth  vs.  Maiden Holdings

eHealth

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in eHealth are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, EHealth demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Maiden Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Maiden Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's essential indicators remain somewhat 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 EHealth and Maiden Holdings

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

The idea behind eHealth and Maiden Holdings 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.