Correlation Between Haemonetics and Cardinal Health

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

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

Diversification Opportunities for Haemonetics and Cardinal Health

-0.79

Correlation Coefficient

Haemonetics  Cardinal Health

Pay attention - limited upside

The 3 months correlation between Haemonetics and Cardinal is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Haemonetics and Cardinal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Health and Haemonetics 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 Haemonetics are associated (or correlated) with Cardinal Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardinal Health has no effect on the direction of Haemonetics i.e., Haemonetics and Cardinal Health go up and down completely randomly.

Pair Corralation between Haemonetics and Cardinal Health

Considering the 90-day investment horizon Haemonetics is expected to generate 2.17 times less return on investment than Cardinal Health. In addition to that, Haemonetics is 1.27 times more volatile than Cardinal Health. It trades about 0.02 of its total potential returns per unit of risk. Cardinal Health is currently generating about 0.06 per unit of volatility. If you would invest  7,967  in Cardinal Health on February 23, 2024 and sell it today you would earn a total of  1,638  from holding Cardinal Health or generate 20.56% return on investment over 90 days.

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

Haemonetics  vs.  Cardinal Health

Haemonetics

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Haemonetics are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Haemonetics exhibited solid returns over the last few months and may actually be approaching a breakup point.

Cardinal Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cardinal Health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Haemonetics and Cardinal Health

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

The idea behind Haemonetics and Cardinal 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.