Correlation Between Premier and CareCloud

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

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

Diversification Opportunities for Premier and CareCloud

0.48

Correlation Coefficient

Premier  CareCloud

Very weak diversification

The 3 months correlation between Premier and CareCloud is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Premier and CareCloud in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CareCloud and Premier 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 Premier are associated (or correlated) with CareCloud. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CareCloud has no effect on the direction of Premier i.e., Premier and CareCloud go up and down completely randomly.

Pair Corralation between Premier and CareCloud

Given the investment horizon of 90 days Premier is expected to generate 48.73 times less return on investment than CareCloud. But when comparing it to its historical volatility, Premier is 5.35 times less risky than CareCloud. It trades about 0.01 of its potential returns per unit of risk. CareCloud is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  157.00  in CareCloud on September 17, 2024 and sell it today you would earn a total of  185.00  from holding CareCloud or generate 117.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.6%
Values	Daily Returns

Premier  vs.  CareCloud

Premier

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Premier are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Premier may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CareCloud

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CareCloud are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting essential indicators, CareCloud exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Premier and CareCloud

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

The idea behind Premier and CareCloud 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.