Correlation Between Gaucho Group and Healthcare Trust

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Can any of the company-specific risk be diversified away by investing in both Gaucho Group and Healthcare Trust 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 Gaucho Group and Healthcare Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gaucho Group Holdings and Healthcare Trust PR, you can compare the effects of market volatilities on Gaucho Group and Healthcare Trust 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 Gaucho Group with a short position of Healthcare Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gaucho Group and Healthcare Trust.

Diversification Opportunities for Gaucho Group and Healthcare Trust

-0.39
  Correlation Coefficient

Very good diversification

The 3 months correlation between Gaucho and Healthcare is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Gaucho Group Holdings and Healthcare Trust PR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthcare Trust and Gaucho Group 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 Gaucho Group Holdings are associated (or correlated) with Healthcare Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Healthcare Trust has no effect on the direction of Gaucho Group i.e., Gaucho Group and Healthcare Trust go up and down completely randomly.

Pair Corralation between Gaucho Group and Healthcare Trust

Given the investment horizon of 90 days Gaucho Group Holdings is expected to under-perform the Healthcare Trust. In addition to that, Gaucho Group is 19.9 times more volatile than Healthcare Trust PR. It trades about -0.23 of its total potential returns per unit of risk. Healthcare Trust PR is currently generating about -0.13 per unit of volatility. If you would invest  1,640  in Healthcare Trust PR on August 24, 2024 and sell it today you would lose (41.00) from holding Healthcare Trust PR or give up 2.5% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Gaucho Group Holdings  vs.  Healthcare Trust PR

 Performance 
       Timeline  
Gaucho Group Holdings 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Gaucho Group Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.
Healthcare Trust 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Healthcare Trust PR are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating forward indicators, Healthcare Trust may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Gaucho Group and Healthcare Trust Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Gaucho Group and Healthcare Trust

The main advantage of trading using opposite Gaucho Group and Healthcare Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gaucho Group position performs unexpectedly, Healthcare Trust 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 Trust will offset losses from the drop in Healthcare Trust's long position.
The idea behind Gaucho Group Holdings and Healthcare Trust PR 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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