Correlation Between Evolent Health and Forian

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

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

Diversification Opportunities for Evolent Health and Forian

0.51

Correlation Coefficient

Evolent Health  Forian

Very weak diversification

The 3 months correlation between Evolent and Forian is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Evolent Health and Forian Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forian Inc and Evolent 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 Evolent Health are associated (or correlated) with Forian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forian Inc has no effect on the direction of Evolent Health i.e., Evolent Health and Forian go up and down completely randomly.

Pair Corralation between Evolent Health and Forian

Considering the 90-day investment horizon Evolent Health is expected to generate 0.32 times more return on investment than Forian. However, Evolent Health is 3.14 times less risky than Forian. It trades about -0.29 of its potential returns per unit of risk. Forian Inc is currently generating about -0.27 per unit of risk. If you would invest  3,293  in Evolent Health on January 20, 2024 and sell it today you would lose (331.00) from holding Evolent Health or give up 10.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Evolent Health  vs.  Forian Inc

Evolent Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evolent Health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Evolent Health is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Forian Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Forian Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Forian is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Evolent Health and Forian

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

The idea behind Evolent Health and Forian Inc 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.