Correlation Between R1 RCM and Health Catalyst

Can any of the company-specific risk be diversified away by investing in both R1 RCM and Health Catalyst 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 R1 RCM and Health Catalyst into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between R1 RCM Inc and Health Catalyst, you can compare the effects of market volatilities on R1 RCM and Health Catalyst 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 R1 RCM with a short position of Health Catalyst. Check out your portfolio center. Please also check ongoing floating volatility patterns of R1 RCM and Health Catalyst.

Diversification Opportunities for R1 RCM and Health Catalyst

0.15

Correlation Coefficient

R1 RCM  Health Catalyst

Average diversification

The 3 months correlation between RCM and Health is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding R1 RCM Inc and Health Catalyst in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Health Catalyst and R1 RCM 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 R1 RCM Inc are associated (or correlated) with Health Catalyst. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Health Catalyst has no effect on the direction of R1 RCM i.e., R1 RCM and Health Catalyst go up and down completely randomly.

Pair Corralation between R1 RCM and Health Catalyst

Considering the 90-day investment horizon R1 RCM is expected to generate 6.07 times less return on investment than Health Catalyst. But when comparing it to its historical volatility, R1 RCM Inc is 28.1 times less risky than Health Catalyst. It trades about 0.25 of its potential returns per unit of risk. Health Catalyst is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  729.00  in Health Catalyst on September 6, 2024 and sell it today you would earn a total of  64.00  from holding Health Catalyst or generate 8.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	82.81%
Values	Daily Returns

R1 RCM Inc  vs.  Health Catalyst

R1 RCM Inc

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days R1 RCM Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, R1 RCM is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Health Catalyst

Risk-Adjusted Performance

4 of 100

Insignificant

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

Pair Trading with R1 RCM and Health Catalyst

The main advantage of trading using opposite R1 RCM and Health Catalyst positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if R1 RCM position performs unexpectedly, Health Catalyst 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 Health Catalyst will offset losses from the drop in Health Catalyst's long position.

The idea behind R1 RCM Inc and Health Catalyst 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.