Correlation Between Ascendis Health and Life Healthcare
Can any of the company-specific risk be diversified away by investing in both Ascendis Health and Life 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 Ascendis Health and Life Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ascendis Health and Life Healthcare, you can compare the effects of market volatilities on Ascendis Health and Life 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 Ascendis Health with a short position of Life Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ascendis Health and Life Healthcare.
Diversification Opportunities for Ascendis Health and Life Healthcare
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ascendis and Life is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Ascendis Health and Life Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Life Healthcare and Ascendis 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 Ascendis Health are associated (or correlated) with Life Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Life Healthcare has no effect on the direction of Ascendis Health i.e., Ascendis Health and Life Healthcare go up and down completely randomly.
Pair Corralation between Ascendis Health and Life Healthcare
Assuming the 90 days trading horizon Ascendis Health is expected to generate 1.36 times more return on investment than Life Healthcare. However, Ascendis Health is 1.36 times more volatile than Life Healthcare. It trades about 0.18 of its potential returns per unit of risk. Life Healthcare is currently generating about 0.04 per unit of risk. If you would invest 7,000 in Ascendis Health on August 27, 2024 and sell it today you would earn a total of 500.00 from holding Ascendis Health or generate 7.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ascendis Health vs. Life Healthcare
Performance |
| Timeline |
| Ascendis Health |
| Life Healthcare |
Ascendis Health and Life Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ascendis Health and Life Healthcare
The main advantage of trading using opposite Ascendis Health and Life Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ascendis Health position performs unexpectedly, Life 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 Life Healthcare will offset losses from the drop in Life Healthcare's long position.| Ascendis Health vs. Trematon Capital Investments | Ascendis Health vs. Hosken Consolidated Investments | Ascendis Health vs. Allied Electronics | Ascendis Health vs. Kumba Iron Ore |
| Life Healthcare vs. Astoria Investments | Life Healthcare vs. Safari Investments RSA | Life Healthcare vs. Zeder Investments | Life Healthcare vs. Trematon Capital Investments |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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