Correlation Between OPTIMIZERx Corp and HealthStream

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

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

Diversification Opportunities for OPTIMIZERx Corp and HealthStream

-0.64

Correlation Coefficient

OPTIMIZERx Corp  HealthStream

Excellent diversification

The 3 months correlation between OPTIMIZERx and HealthStream is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding OPTIMIZERx Corp and HealthStream in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HealthStream and OPTIMIZERx Corp 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 OPTIMIZERx Corp 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 OPTIMIZERx Corp i.e., OPTIMIZERx Corp and HealthStream go up and down completely randomly.

Pair Corralation between OPTIMIZERx Corp and HealthStream

Given the investment horizon of 90 days OPTIMIZERx Corp is expected to under-perform the HealthStream. In addition to that, OPTIMIZERx Corp is 3.97 times more volatile than HealthStream. It trades about -0.07 of its total potential returns per unit of risk. HealthStream is currently generating about 0.1 per unit of volatility. 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	Weak
Accuracy	100.0%
Values	Daily Returns

OPTIMIZERx Corp  vs.  HealthStream

OPTIMIZERx Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OPTIMIZERx Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

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 OPTIMIZERx Corp and HealthStream

The main advantage of trading using opposite OPTIMIZERx Corp and HealthStream positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OPTIMIZERx Corp 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 OPTIMIZERx Corp 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.