Correlation Between Healthcare Integrated and Cogstate

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

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

Diversification Opportunities for Healthcare Integrated and Cogstate

-0.1

Correlation Coefficient

Healthcare Integrated  Cogstate

Good diversification

The 3 months correlation between Healthcare and Cogstate is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Healthcare Integrated Technolo and Cogstate Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogstate Limited and Healthcare Integrated 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 Integrated Technologies are associated (or correlated) with Cogstate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cogstate Limited has no effect on the direction of Healthcare Integrated i.e., Healthcare Integrated and Cogstate go up and down completely randomly.

Pair Corralation between Healthcare Integrated and Cogstate

Given the investment horizon of 90 days Healthcare Integrated Technologies is expected to generate 3.45 times more return on investment than Cogstate. However, Healthcare Integrated is 3.45 times more volatile than Cogstate Limited. It trades about 0.12 of its potential returns per unit of risk. Cogstate Limited is currently generating about 0.08 per unit of risk. If you would invest  8.00  in Healthcare Integrated Technologies on September 4, 2024 and sell it today you would earn a total of  4.00  from holding Healthcare Integrated Technologies or generate 50.0% return on investment over 90 days.

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

Healthcare Integrated Technolo  vs.  Cogstate Limited

Healthcare Integrated

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Healthcare Integrated Technologies are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Healthcare Integrated exhibited solid returns over the last few months and may actually be approaching a breakup point.

Cogstate Limited

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cogstate Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Cogstate may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Healthcare Integrated and Cogstate

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

The idea behind Healthcare Integrated Technologies and Cogstate Limited 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.