Correlation Between Forian and CareMax
Can any of the company-specific risk be diversified away by investing in both Forian and CareMax 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 Forian and CareMax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Forian Inc and CareMax, you can compare the effects of market volatilities on Forian and CareMax 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 Forian with a short position of CareMax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forian and CareMax.
Diversification Opportunities for Forian and CareMax
Poor diversification
The 3 months correlation between Forian and CareMax is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Forian Inc and CareMax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CareMax and Forian 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 Forian Inc are associated (or correlated) with CareMax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CareMax has no effect on the direction of Forian i.e., Forian and CareMax go up and down completely randomly.
Pair Corralation between Forian and CareMax
Given the investment horizon of 90 days Forian Inc is expected to generate 0.12 times more return on investment than CareMax. However, Forian Inc is 8.08 times less risky than CareMax. It trades about 0.15 of its potential returns per unit of risk. CareMax is currently generating about -0.19 per unit of risk. If you would invest 205.00 in Forian Inc on August 25, 2024 and sell it today you would earn a total of 11.00 from holding Forian Inc or generate 5.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Forian Inc vs. CareMax
Performance |
| Timeline |
| Forian Inc |
| CareMax |
Forian and CareMax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Forian and CareMax
The main advantage of trading using opposite Forian and CareMax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Forian position performs unexpectedly, CareMax 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 CareMax will offset losses from the drop in CareMax's long position.| Forian vs. HealthStream | Forian vs. National Research Corp | Forian vs. HealthEquity | Forian vs. Health Catalyst |
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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