Correlation Between HHG Capital and Healthcare
Can any of the company-specific risk be diversified away by investing in both HHG Capital 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 HHG Capital and Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HHG Capital and Healthcare AI Acquisition, you can compare the effects of market volatilities on HHG Capital 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 HHG Capital with a short position of Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of HHG Capital and Healthcare.
Diversification Opportunities for HHG Capital and Healthcare
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between HHG and Healthcare is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding HHG Capital 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 HHG Capital 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 HHG Capital 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 HHG Capital i.e., HHG Capital and Healthcare go up and down completely randomly.
Pair Corralation between HHG Capital and Healthcare
Assuming the 90 days horizon HHG Capital is expected to generate 1.0 times less return on investment than Healthcare. But when comparing it to its historical volatility, HHG Capital is 1.06 times less risky than Healthcare. It trades about 0.18 of its potential returns per unit of risk. Healthcare AI Acquisition is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 6.10 in Healthcare AI Acquisition on September 2, 2024 and sell it today you would lose (3.87) from holding Healthcare AI Acquisition or give up 63.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.21% |
| Values | Daily Returns |
HHG Capital vs. Healthcare AI Acquisition
Performance |
| Timeline |
| HHG Capital |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
| Healthcare AI Acquisition |
HHG Capital and Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HHG Capital and Healthcare
The main advantage of trading using opposite HHG Capital and Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HHG Capital 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.The idea behind HHG Capital and Healthcare AI Acquisition 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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