Correlation Between Science Applications and EHEALTH
Can any of the company-specific risk be diversified away by investing in both Science Applications and EHEALTH 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 Science Applications and EHEALTH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Science Applications International and EHEALTH, you can compare the effects of market volatilities on Science Applications and EHEALTH 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 Science Applications with a short position of EHEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Science Applications and EHEALTH.
Diversification Opportunities for Science Applications and EHEALTH
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Science and EHEALTH is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Science Applications Internati and EHEALTH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EHEALTH and Science Applications 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 Science Applications International are associated (or correlated) with EHEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EHEALTH has no effect on the direction of Science Applications i.e., Science Applications and EHEALTH go up and down completely randomly.
Pair Corralation between Science Applications and EHEALTH
Assuming the 90 days trading horizon Science Applications is expected to generate 1.11 times less return on investment than EHEALTH. But when comparing it to its historical volatility, Science Applications International is 2.15 times less risky than EHEALTH. It trades about 0.05 of its potential returns per unit of risk. EHEALTH is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 486.00 in EHEALTH on September 3, 2024 and sell it today you would earn a total of 9.00 from holding EHEALTH or generate 1.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Science Applications Internati vs. EHEALTH
Performance |
| Timeline |
| Science Applications |
| EHEALTH |
Science Applications and EHEALTH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Science Applications and EHEALTH
The main advantage of trading using opposite Science Applications and EHEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Science Applications position performs unexpectedly, EHEALTH 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 EHEALTH will offset losses from the drop in EHEALTH's long position.| Science Applications vs. Apple Inc | Science Applications vs. Apple Inc | Science Applications vs. Apple Inc | Science Applications vs. Apple Inc |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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