Correlation Between CareMax and Dynatronics

Can any of the company-specific risk be diversified away by investing in both CareMax and Dynatronics 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 CareMax and Dynatronics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CareMax and Dynatronics, you can compare the effects of market volatilities on CareMax and Dynatronics 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 CareMax with a short position of Dynatronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of CareMax and Dynatronics.

Diversification Opportunities for CareMax and Dynatronics

-0.28

Correlation Coefficient

CareMax  Dynatronics

Very good diversification

The 3 months correlation between CareMax and Dynatronics is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding CareMax and Dynatronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynatronics and CareMax 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 CareMax are associated (or correlated) with Dynatronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynatronics has no effect on the direction of CareMax i.e., CareMax and Dynatronics go up and down completely randomly.

Pair Corralation between CareMax and Dynatronics

Assuming the 90 days horizon CareMax is expected to under-perform the Dynatronics. In addition to that, CareMax is 1.42 times more volatile than Dynatronics. It trades about -0.15 of its total potential returns per unit of risk. Dynatronics is currently generating about 0.16 per unit of volatility. If you would invest  42.00  in Dynatronics on January 29, 2024 and sell it today you would earn a total of  13.00  from holding Dynatronics or generate 30.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	61.9%
Values	Daily Returns

CareMax  vs.  Dynatronics

CareMax

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CareMax are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, CareMax showed solid returns over the last few months and may actually be approaching a breakup point.

Dynatronics

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dynatronics are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Dynatronics unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CareMax and Dynatronics

The main advantage of trading using opposite CareMax and Dynatronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CareMax position performs unexpectedly, Dynatronics 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 Dynatronics will offset losses from the drop in Dynatronics' long position.

The idea behind CareMax and Dynatronics 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.