Correlation Between Identi Healthcare and Automatic Bank

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

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

Diversification Opportunities for Identi Healthcare and Automatic Bank

-0.47

Correlation Coefficient

Identi Healthcare  Automatic Bank

Very good diversification

The 3 months correlation between Identi and Automatic is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Identi Healthcare and Automatic Bank Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automatic Bank Services and Identi 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 Identi Healthcare are associated (or correlated) with Automatic Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automatic Bank Services has no effect on the direction of Identi Healthcare i.e., Identi Healthcare and Automatic Bank go up and down completely randomly.

Pair Corralation between Identi Healthcare and Automatic Bank

Assuming the 90 days trading horizon Identi Healthcare is expected to generate 1.91 times more return on investment than Automatic Bank. However, Identi Healthcare is 1.91 times more volatile than Automatic Bank Services. It trades about 0.22 of its potential returns per unit of risk. Automatic Bank Services is currently generating about 0.03 per unit of risk. If you would invest  14,920  in Identi Healthcare on October 1, 2024 and sell it today you would earn a total of  2,940  from holding Identi Healthcare or generate 19.71% return on investment over 90 days.

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

Identi Healthcare  vs.  Automatic Bank Services

Identi Healthcare

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Identi Healthcare are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Identi Healthcare is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Automatic Bank Services

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Automatic Bank Services are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Automatic Bank sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Identi Healthcare and Automatic Bank

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

The idea behind Identi Healthcare and Automatic Bank Services 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.