Correlation Between Horizon Active and Medical Equipment

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

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

Diversification Opportunities for Horizon Active and Medical Equipment

0.89

Correlation Coefficient

Horizon Active  Medical Equipment

Very poor diversification

The 3 months correlation between Horizon and Medical is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Horizon Active Income and Medical Equipment And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medical Equipment And and Horizon Active 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 Horizon Active Income are associated (or correlated) with Medical Equipment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medical Equipment And has no effect on the direction of Horizon Active i.e., Horizon Active and Medical Equipment go up and down completely randomly.

Pair Corralation between Horizon Active and Medical Equipment

Assuming the 90 days horizon Horizon Active is expected to generate 2.51 times less return on investment than Medical Equipment. But when comparing it to its historical volatility, Horizon Active Income is 4.11 times less risky than Medical Equipment. It trades about 0.3 of its potential returns per unit of risk. Medical Equipment And is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  6,628  in Medical Equipment And on June 24, 2024 and sell it today you would earn a total of  160.00  from holding Medical Equipment And or generate 2.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Horizon Active Income  vs.  Medical Equipment And

Horizon Active Income

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Horizon Active Income are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Horizon Active is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Medical Equipment And

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Medical Equipment And are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Medical Equipment may actually be approaching a critical reversion point that can send shares even higher in October 2024.

Pair Trading with Horizon Active and Medical Equipment

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

The idea behind Horizon Active Income and Medical Equipment And 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.

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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.