Correlation Between Digital Health and Healthcare
Can any of the company-specific risk be diversified away by investing in both Digital Health and 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 Digital Health and Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Digital Health Acquisition and Healthcare AI Acquisition, you can compare the effects of market volatilities on Digital Health and 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 Digital Health with a short position of Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital Health and Healthcare.
Diversification Opportunities for Digital Health and Healthcare
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Digital and Healthcare is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Digital Health Acquisition and Healthcare AI Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthcare AI Acquisition and Digital 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 Digital Health Acquisition are associated (or correlated) with Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Healthcare AI Acquisition has no effect on the direction of Digital Health i.e., Digital Health and Healthcare go up and down completely randomly.
Pair Corralation between Digital Health and Healthcare
Given the investment horizon of 90 days Digital Health Acquisition is expected to under-perform the Healthcare. In addition to that, Digital Health is 7.05 times more volatile than Healthcare AI Acquisition. It trades about -0.21 of its total potential returns per unit of risk. Healthcare AI Acquisition is currently generating about 0.01 per unit of volatility. If you would invest 1,106 in Healthcare AI Acquisition on September 1, 2024 and sell it today you would earn a total of 15.00 from holding Healthcare AI Acquisition or generate 1.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 12.7% |
| Values | Daily Returns |
Digital Health Acquisition vs. Healthcare AI Acquisition
Performance |
| Timeline |
| Digital Health Acqui |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Healthcare AI Acquisition |
Digital Health and Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digital Health and Healthcare
The main advantage of trading using opposite Digital Health and Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital Health position performs unexpectedly, 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 Healthcare will offset losses from the drop in Healthcare's long position.| Digital Health vs. Insight Acquisition Corp | Digital Health vs. AlphaVest Acquisition Corp | Digital Health vs. Oak Woods Acquisition | Digital Health vs. Insight Acquisition Corp |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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