Correlation Between Fonar and Cue Health

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

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

Diversification Opportunities for Fonar and Cue Health

0.82

Correlation Coefficient

Fonar  Cue Health

Very poor diversification

The 3 months correlation between Fonar and Cue is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Fonar and Cue Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cue Health and Fonar 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 Fonar are associated (or correlated) with Cue Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cue Health has no effect on the direction of Fonar i.e., Fonar and Cue Health go up and down completely randomly.

Pair Corralation between Fonar and Cue Health

Given the investment horizon of 90 days Fonar is expected to generate 0.48 times more return on investment than Cue Health. However, Fonar is 2.1 times less risky than Cue Health. It trades about -0.28 of its potential returns per unit of risk. Cue Health is currently generating about -0.17 per unit of risk. If you would invest  1,875  in Fonar on February 6, 2024 and sell it today you would lose (244.00) from holding Fonar or give up 13.01% of portfolio value over 90 days.

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

Fonar  vs.  Cue Health

Fonar

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fonar has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in June 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Cue Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cue Health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in June 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Fonar and Cue Health

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

The idea behind Fonar and Cue Health 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.