Correlation Between Payment Financial and Identi Healthcare

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

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

Diversification Opportunities for Payment Financial and Identi Healthcare

-0.44

Correlation Coefficient

Payment Financial  Identi Healthcare

Very good diversification

The 3 months correlation between Payment and Identi is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Payment Financial Technologies and Identi Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Identi Healthcare and Payment Financial 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 Payment Financial Technologies are associated (or correlated) with Identi Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Identi Healthcare has no effect on the direction of Payment Financial i.e., Payment Financial and Identi Healthcare go up and down completely randomly.

Pair Corralation between Payment Financial and Identi Healthcare

Assuming the 90 days trading horizon Payment Financial Technologies is expected to generate 0.68 times more return on investment than Identi Healthcare. However, Payment Financial Technologies is 1.47 times less risky than Identi Healthcare. It trades about 0.2 of its potential returns per unit of risk. Identi Healthcare is currently generating about 0.06 per unit of risk. If you would invest  24,124  in Payment Financial Technologies on September 21, 2024 and sell it today you would earn a total of  9,546  from holding Payment Financial Technologies or generate 39.57% return on investment over 90 days.

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

Payment Financial Technologies  vs.  Identi Healthcare

Payment Financial

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Payment Financial Technologies are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Payment Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Identi Healthcare

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Identi Healthcare are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Identi Healthcare sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Payment Financial and Identi Healthcare

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

The idea behind Payment Financial Technologies and Identi Healthcare 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.