Correlation Between Renalytix and Streamline Health

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

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

Diversification Opportunities for Renalytix and Streamline Health

0.43

Correlation Coefficient

Renalytix  Streamline Health

Very weak diversification

The 3 months correlation between Renalytix and Streamline is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Renalytix AI and Streamline Health Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Streamline Health and Renalytix 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 Renalytix AI are associated (or correlated) with Streamline Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Streamline Health has no effect on the direction of Renalytix i.e., Renalytix and Streamline Health go up and down completely randomly.

Pair Corralation between Renalytix and Streamline Health

Given the investment horizon of 90 days Renalytix AI is expected to under-perform the Streamline Health. But the stock apears to be less risky and, when comparing its historical volatility, Renalytix AI is 1.53 times less risky than Streamline Health. The stock trades about -0.15 of its potential returns per unit of risk. The Streamline Health Solutions is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  329.00  in Streamline Health Solutions on September 13, 2024 and sell it today you would earn a total of  13.00  from holding Streamline Health Solutions or generate 3.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Renalytix AI  vs.  Streamline Health Solutions

Renalytix AI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Renalytix AI 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 essential 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.

Streamline Health

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Streamline Health Solutions are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Streamline Health displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Renalytix and Streamline Health

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

The idea behind Renalytix AI and Streamline Health Solutions 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.