Correlation Between WELL Health and Astron Connect
Can any of the company-specific risk be diversified away by investing in both WELL Health and Astron Connect 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 WELL Health and Astron Connect into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WELL Health Technologies and Astron Connect, you can compare the effects of market volatilities on WELL Health and Astron Connect 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 WELL Health with a short position of Astron Connect. Check out your portfolio center. Please also check ongoing floating volatility patterns of WELL Health and Astron Connect.
Diversification Opportunities for WELL Health and Astron Connect
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between WELL and Astron is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding WELL Health Technologies and Astron Connect in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astron Connect and WELL 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 WELL Health Technologies are associated (or correlated) with Astron Connect. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astron Connect has no effect on the direction of WELL Health i.e., WELL Health and Astron Connect go up and down completely randomly.
Pair Corralation between WELL Health and Astron Connect
Assuming the 90 days trading horizon WELL Health is expected to generate 1.41 times less return on investment than Astron Connect. But when comparing it to its historical volatility, WELL Health Technologies is 3.51 times less risky than Astron Connect. It trades about 0.16 of its potential returns per unit of risk. Astron Connect is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2.00 in Astron Connect on October 18, 2024 and sell it today you would earn a total of 1.00 from holding Astron Connect or generate 50.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WELL Health Technologies vs. Astron Connect
Performance |
| Timeline |
| WELL Health Technologies |
| Astron Connect |
WELL Health and Astron Connect Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WELL Health and Astron Connect
The main advantage of trading using opposite WELL Health and Astron Connect positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WELL Health position performs unexpectedly, Astron Connect 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 Astron Connect will offset losses from the drop in Astron Connect's long position.The idea behind WELL Health Technologies and Astron Connect 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.| Astron Connect vs. Costco Wholesale Corp | Astron Connect vs. Verizon Communications CDR | Astron Connect vs. Bank of Nova | Astron Connect vs. Maple Leaf Foods |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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