Correlation Between Cue Health and HealthStream

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

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

Diversification Opportunities for Cue Health and HealthStream

-0.85

Correlation Coefficient

Cue Health  HealthStream

Pay attention - limited upside

The 3 months correlation between Cue and HealthStream is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Cue Health and HealthStream in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HealthStream and Cue 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 Cue Health are associated (or correlated) with HealthStream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HealthStream has no effect on the direction of Cue Health i.e., Cue Health and HealthStream go up and down completely randomly.

Pair Corralation between Cue Health and HealthStream

If you would invest  2,919  in HealthStream on September 17, 2024 and sell it today you would earn a total of  315.00  from holding HealthStream or generate 10.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	0.0%
Values	Daily Returns

Cue Health  vs.  HealthStream

Cue Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cue Health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Cue Health is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

HealthStream

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HealthStream are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, HealthStream may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Cue Health and HealthStream

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

The idea behind Cue Health and HealthStream 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .