Correlation Between Health Catalyst and R1 RCM

Can any of the company-specific risk be diversified away by investing in both Health Catalyst and R1 RCM 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 Health Catalyst and R1 RCM into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Health Catalyst and R1 RCM Inc, you can compare the effects of market volatilities on Health Catalyst and R1 RCM 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 Health Catalyst with a short position of R1 RCM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Health Catalyst and R1 RCM.

Diversification Opportunities for Health Catalyst and R1 RCM

0.21

Correlation Coefficient

Health Catalyst  R1 RCM

Modest diversification

The 3 months correlation between Health and RCM is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Health Catalyst and R1 RCM Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on R1 RCM Inc and Health Catalyst 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 Health Catalyst are associated (or correlated) with R1 RCM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of R1 RCM Inc has no effect on the direction of Health Catalyst i.e., Health Catalyst and R1 RCM go up and down completely randomly.

Pair Corralation between Health Catalyst and R1 RCM

Given the investment horizon of 90 days Health Catalyst is expected to generate 1.38 times less return on investment than R1 RCM. In addition to that, Health Catalyst is 1.62 times more volatile than R1 RCM Inc. It trades about 0.03 of its total potential returns per unit of risk. R1 RCM Inc is currently generating about 0.06 per unit of volatility. If you would invest  1,020  in R1 RCM Inc on September 5, 2024 and sell it today you would earn a total of  411.00  from holding R1 RCM Inc or generate 40.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.97%
Values	Daily Returns

Health Catalyst  vs.  R1 RCM Inc

Health Catalyst

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Health Catalyst are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Health Catalyst may actually be approaching a critical reversion point that can send shares even higher in January 2025.

R1 RCM Inc

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days R1 RCM Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, R1 RCM is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Health Catalyst and R1 RCM

The main advantage of trading using opposite Health Catalyst and R1 RCM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Health Catalyst position performs unexpectedly, R1 RCM 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 R1 RCM will offset losses from the drop in R1 RCM's long position.

The idea behind Health Catalyst and R1 RCM Inc 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.