Correlation Between Life Healthcare and Ascendis Health
Can any of the company-specific risk be diversified away by investing in both Life Healthcare and Ascendis Health 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 Life Healthcare and Ascendis Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Life Healthcare and Ascendis Health, you can compare the effects of market volatilities on Life Healthcare and Ascendis Health 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 Life Healthcare with a short position of Ascendis Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Life Healthcare and Ascendis Health.
Diversification Opportunities for Life Healthcare and Ascendis Health
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Life and Ascendis is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Life Healthcare and Ascendis Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ascendis Health and Life Healthcare 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 Life Healthcare are associated (or correlated) with Ascendis Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ascendis Health has no effect on the direction of Life Healthcare i.e., Life Healthcare and Ascendis Health go up and down completely randomly.
Pair Corralation between Life Healthcare and Ascendis Health
Assuming the 90 days trading horizon Life Healthcare is expected to generate 0.45 times more return on investment than Ascendis Health. However, Life Healthcare is 2.24 times less risky than Ascendis Health. It trades about 0.34 of its potential returns per unit of risk. Ascendis Health is currently generating about 0.12 per unit of risk. If you would invest 159,500 in Life Healthcare on August 31, 2024 and sell it today you would earn a total of 14,700 from holding Life Healthcare or generate 9.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Life Healthcare vs. Ascendis Health
Performance |
| Timeline |
| Life Healthcare |
| Ascendis Health |
Life Healthcare and Ascendis Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Life Healthcare and Ascendis Health
The main advantage of trading using opposite Life Healthcare and Ascendis Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Life Healthcare position performs unexpectedly, Ascendis Health 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 Ascendis Health will offset losses from the drop in Ascendis Health's long position.| Life Healthcare vs. Kap Industrial Holdings | Life Healthcare vs. Frontier Transport Holdings | Life Healthcare vs. Master Drilling Group | Life Healthcare vs. Harmony Gold Mining |
| Ascendis Health vs. We Buy Cars | Ascendis Health vs. ABSA Bank Limited | Ascendis Health vs. Standard Bank Group | Ascendis Health vs. Zeder Investments |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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