Correlation Between Evolent Health and CPSI Old

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

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

Diversification Opportunities for Evolent Health and CPSI Old

0.23

Correlation Coefficient

Evolent Health  CPSI Old

Modest diversification

The 3 months correlation between Evolent and CPSI is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Evolent Health and CPSI Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CPSI Old and Evolent Health 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 Evolent Health are associated (or correlated) with CPSI Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CPSI Old has no effect on the direction of Evolent Health i.e., Evolent Health and CPSI Old go up and down completely randomly.

Pair Corralation between Evolent Health and CPSI Old

If you would invest  2,533  in CPSI Old on September 3, 2024 and sell it today you would earn a total of  0.00  from holding CPSI Old or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

Evolent Health  vs.  CPSI Old

Evolent Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evolent Health 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 basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

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.

Pair Trading with Evolent Health and CPSI Old

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

The idea behind Evolent Health and CPSI Old 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.