Correlation Between FEMALE HEALTH and EHEALTH

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

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

Diversification Opportunities for FEMALE HEALTH and EHEALTH

-0.32

Correlation Coefficient

FEMALE HEALTH  EHEALTH

Very good diversification

The 3 months correlation between FEMALE and EHEALTH is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding FEMALE HEALTH and EHEALTH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EHEALTH and FEMALE 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 FEMALE HEALTH are associated (or correlated) with EHEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EHEALTH has no effect on the direction of FEMALE HEALTH i.e., FEMALE HEALTH and EHEALTH go up and down completely randomly.

Pair Corralation between FEMALE HEALTH and EHEALTH

Assuming the 90 days trading horizon FEMALE HEALTH is expected to under-perform the EHEALTH. But the stock apears to be less risky and, when comparing its historical volatility, FEMALE HEALTH is 1.02 times less risky than EHEALTH. The stock trades about 0.0 of its potential returns per unit of risk. The EHEALTH is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  342.00  in EHEALTH on September 14, 2024 and sell it today you would earn a total of  193.00  from holding EHEALTH or generate 56.43% return on investment over 90 days.

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

FEMALE HEALTH  vs.  EHEALTH

FEMALE HEALTH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FEMALE HEALTH has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, FEMALE HEALTH is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

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. In spite of rather uncertain basic indicators, EHEALTH exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FEMALE HEALTH and EHEALTH

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

The idea behind FEMALE HEALTH and EHEALTH 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 Stocks Directory module to find actively traded stocks across global markets.