Correlation Between Astar and HEALTHSTREAM (HL5SG)
Can any of the company-specific risk be diversified away by investing in both Astar and HEALTHSTREAM (HL5SG) 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 Astar and HEALTHSTREAM (HL5SG) into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Astar and HEALTHSTREAM, you can compare the effects of market volatilities on Astar and HEALTHSTREAM (HL5SG) 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 Astar with a short position of HEALTHSTREAM (HL5SG). Check out your portfolio center. Please also check ongoing floating volatility patterns of Astar and HEALTHSTREAM (HL5SG).
Diversification Opportunities for Astar and HEALTHSTREAM (HL5SG)
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Astar and HEALTHSTREAM is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Astar and HEALTHSTREAM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEALTHSTREAM (HL5SG) and Astar 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 Astar are associated (or correlated) with HEALTHSTREAM (HL5SG). Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEALTHSTREAM (HL5SG) has no effect on the direction of Astar i.e., Astar and HEALTHSTREAM (HL5SG) go up and down completely randomly.
Pair Corralation between Astar and HEALTHSTREAM (HL5SG)
Assuming the 90 days trading horizon Astar is expected to under-perform the HEALTHSTREAM (HL5SG). In addition to that, Astar is 4.38 times more volatile than HEALTHSTREAM. It trades about -0.18 of its total potential returns per unit of risk. HEALTHSTREAM is currently generating about -0.03 per unit of volatility. If you would invest 3,120 in HEALTHSTREAM on October 12, 2024 and sell it today you would lose (20.00) from holding HEALTHSTREAM or give up 0.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 80.95% |
| Values | Daily Returns |
Astar vs. HEALTHSTREAM
Performance |
| Timeline |
| Astar |
| HEALTHSTREAM (HL5SG) |
Astar and HEALTHSTREAM (HL5SG) Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Astar and HEALTHSTREAM (HL5SG)
The main advantage of trading using opposite Astar and HEALTHSTREAM (HL5SG) positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astar position performs unexpectedly, HEALTHSTREAM (HL5SG) 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 HEALTHSTREAM (HL5SG) will offset losses from the drop in HEALTHSTREAM (HL5SG)'s long position.The idea behind Astar and HEALTHSTREAM 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.| HEALTHSTREAM (HL5SG) vs. FLOW TRADERS LTD | HEALTHSTREAM (HL5SG) vs. MARKET VECTR RETAIL | HEALTHSTREAM (HL5SG) vs. Canon Marketing Japan | HEALTHSTREAM (HL5SG) vs. SIDETRADE EO 1 |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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