Correlation Between HCW Biologics and Cano Health

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

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

Diversification Opportunities for HCW Biologics and Cano Health

-0.69

Correlation Coefficient

HCW Biologics  Cano Health

Excellent diversification

The 3 months correlation between HCW and Cano is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding HCW Biologics and Cano Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cano Health and HCW Biologics 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 HCW Biologics are associated (or correlated) with Cano Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cano Health has no effect on the direction of HCW Biologics i.e., HCW Biologics and Cano Health go up and down completely randomly.

Pair Corralation between HCW Biologics and Cano Health

If you would invest  24.00  in Cano Health on February 8, 2024 and sell it today you would earn a total of  0.00  from holding Cano Health or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	4.35%
Values	Daily Returns

HCW Biologics  vs.  Cano Health

HCW Biologics

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in HCW Biologics are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, HCW Biologics sustained solid returns over the last few months and may actually be approaching a breakup point.

Cano Health

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Cano Health has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very inconsistent basic indicators, Cano Health displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HCW Biologics and Cano Health

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

The idea behind HCW Biologics and Cano 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.