Correlation Between Privia Health and CareCloud

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

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

Diversification Opportunities for Privia Health and CareCloud

0.65

Correlation Coefficient

Privia Health  CareCloud

Poor diversification

The 3 months correlation between Privia and CareCloud is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Privia Health Group and CareCloud in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CareCloud and Privia 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 Privia Health Group 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 Privia Health i.e., Privia Health and CareCloud go up and down completely randomly.

Pair Corralation between Privia Health and CareCloud

Given the investment horizon of 90 days Privia Health is expected to generate 4.34 times less return on investment than CareCloud. But when comparing it to its historical volatility, Privia Health Group is 2.11 times less risky than CareCloud. It trades about 0.01 of its potential returns per unit of risk. CareCloud is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,356  in CareCloud on August 31, 2024 and sell it today you would lose (665.00) from holding CareCloud or give up 28.23% of portfolio value over 90 days.

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

Privia Health Group  vs.  CareCloud

Privia Health Group

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Privia Health Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Privia Health sustained solid returns over the last few months and may actually be approaching a breakup point.

CareCloud

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CareCloud are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent fundamental indicators, CareCloud reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Privia Health and CareCloud

The main advantage of trading using opposite Privia Health and CareCloud positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Privia Health 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 Privia Health Group 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.