Correlation Between EHEALTH and Data#3

Can any of the company-specific risk be diversified away by investing in both EHEALTH and Data#3 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 EHEALTH and Data#3 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between EHEALTH and Data3 Limited, you can compare the effects of market volatilities on EHEALTH and Data#3 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 EHEALTH with a short position of Data#3. Check out your portfolio center. Please also check ongoing floating volatility patterns of EHEALTH and Data#3.

Diversification Opportunities for EHEALTH and Data#3

0.15

Correlation Coefficient

EHEALTH  Data#3

Average diversification

The 3 months correlation between EHEALTH and Data#3 is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding EHEALTH and Data3 Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Data3 Limited and EHEALTH 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 EHEALTH are associated (or correlated) with Data#3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Data3 Limited has no effect on the direction of EHEALTH i.e., EHEALTH and Data#3 go up and down completely randomly.

Pair Corralation between EHEALTH and Data#3

Assuming the 90 days trading horizon EHEALTH is expected to generate 1.95 times more return on investment than Data#3. However, EHEALTH is 1.95 times more volatile than Data3 Limited. It trades about 0.19 of its potential returns per unit of risk. Data3 Limited is currently generating about -0.02 per unit of risk. If you would invest  342.00  in EHEALTH on September 14, 2024 and sell it today you would earn a total of  193.00  from holding EHEALTH or generate 56.43% return on investment over 90 days.

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

EHEALTH  vs.  Data3 Limited

EHEALTH

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in EHEALTH are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, EHEALTH exhibited solid returns over the last few months and may actually be approaching a breakup point.

Data3 Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Data3 Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Data#3 is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with EHEALTH and Data#3

The main advantage of trading using opposite EHEALTH and Data#3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EHEALTH position performs unexpectedly, Data#3 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 Data#3 will offset losses from the drop in Data#3's long position.

The idea behind EHEALTH and Data3 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.