Correlation Between Healthcare and GSR II

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

By analyzing existing cross correlation between Healthcare AI Acquisition and GSR II Meteora, you can compare the effects of market volatilities on Healthcare and GSR II 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 Healthcare with a short position of GSR II. Check out your portfolio center. Please also check ongoing floating volatility patterns of Healthcare and GSR II.

Diversification Opportunities for Healthcare and GSR II

-0.42

Correlation Coefficient

Healthcare  GSR II

Very good diversification

The 3 months correlation between Healthcare and GSR is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Healthcare AI Acquisition and GSR II Meteora in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GSR II Meteora and Healthcare 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 Healthcare AI Acquisition are associated (or correlated) with GSR II. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GSR II Meteora has no effect on the direction of Healthcare i.e., Healthcare and GSR II go up and down completely randomly.

Pair Corralation between Healthcare and GSR II

If you would invest  2.03  in Healthcare AI Acquisition on September 16, 2024 and sell it today you would lose (0.91) from holding Healthcare AI Acquisition or give up 44.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	3.03%
Values	Daily Returns

Healthcare AI Acquisition  vs.  GSR II Meteora

Healthcare AI Acquisition

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Healthcare AI Acquisition are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Healthcare showed solid returns over the last few months and may actually be approaching a breakup point.

GSR II Meteora

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GSR II Meteora has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable primary indicators, GSR II is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Healthcare and GSR II

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

The idea behind Healthcare AI Acquisition and GSR II Meteora 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.