Correlation Between CareMax and Forian
Can any of the company-specific risk be diversified away by investing in both CareMax and Forian 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 CareMax and Forian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CareMax and Forian Inc, you can compare the effects of market volatilities on CareMax and Forian 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 CareMax with a short position of Forian. Check out your portfolio center. Please also check ongoing floating volatility patterns of CareMax and Forian.
Diversification Opportunities for CareMax and Forian
Poor diversification
The 3 months correlation between CareMax and Forian is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding CareMax and Forian Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forian Inc and CareMax 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 CareMax are associated (or correlated) with Forian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forian Inc has no effect on the direction of CareMax i.e., CareMax and Forian go up and down completely randomly.
Pair Corralation between CareMax and Forian
Given the investment horizon of 90 days CareMax is expected to under-perform the Forian. In addition to that, CareMax is 6.3 times more volatile than Forian Inc. It trades about -0.24 of its total potential returns per unit of risk. Forian Inc is currently generating about 0.0 per unit of volatility. If you would invest 207.00 in Forian Inc on August 28, 2024 and sell it today you would lose (1.00) from holding Forian Inc or give up 0.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CareMax vs. Forian Inc
Performance |
| Timeline |
| CareMax |
| Forian Inc |
CareMax and Forian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CareMax and Forian
The main advantage of trading using opposite CareMax and Forian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CareMax position performs unexpectedly, Forian 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 Forian will offset losses from the drop in Forian's long position.The idea behind CareMax and Forian Inc 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.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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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