Correlation Between Cue Health and Pharma Bio

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

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

Diversification Opportunities for Cue Health and Pharma Bio

0.71

Correlation Coefficient

Cue Health  Pharma Bio

Poor diversification

The 3 months correlation between Cue and Pharma is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Cue Health and Pharma Bio Serv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pharma Bio Serv 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 Pharma Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pharma Bio Serv has no effect on the direction of Cue Health i.e., Cue Health and Pharma Bio go up and down completely randomly.

Pair Corralation between Cue Health and Pharma Bio

If you would invest  51.00  in Pharma Bio Serv on September 17, 2024 and sell it today you would earn a total of  4.00  from holding Pharma Bio Serv or generate 7.84% return on investment over 90 days.

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

Cue Health  vs.  Pharma Bio Serv

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.

Pharma Bio Serv

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pharma Bio Serv has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Pharma Bio 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 Cue Health and Pharma Bio

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

The idea behind Cue Health and Pharma Bio Serv 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.