Correlation Between Advanced Health and Elastic NV

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

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

Diversification Opportunities for Advanced Health and Elastic NV

-0.72

Correlation Coefficient

Advanced Health  Elastic NV

Pay attention - limited upside

The 3 months correlation between Advanced and Elastic is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Health Intelligence and Elastic NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elastic NV and Advanced 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 Advanced Health Intelligence are associated (or correlated) with Elastic NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elastic NV has no effect on the direction of Advanced Health i.e., Advanced Health and Elastic NV go up and down completely randomly.

Pair Corralation between Advanced Health and Elastic NV

Assuming the 90 days horizon Advanced Health Intelligence is expected to under-perform the Elastic NV. In addition to that, Advanced Health is 1.4 times more volatile than Elastic NV. It trades about -0.18 of its total potential returns per unit of risk. Elastic NV is currently generating about 0.18 per unit of volatility. If you would invest  7,704  in Elastic NV on September 23, 2024 and sell it today you would earn a total of  2,659  from holding Elastic NV or generate 34.51% return on investment over 90 days.

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

Advanced Health Intelligence  vs.  Elastic NV

Advanced Health Inte

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Advanced Health Intelligence has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Elastic NV

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Elastic NV are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Elastic NV exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Advanced Health and Elastic NV

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

The idea behind Advanced Health Intelligence and Elastic NV 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 Stocks Directory module to find actively traded stocks across global markets.