Correlation Between Allscripts Healthcare and Rewalk Robotics

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

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

Diversification Opportunities for Allscripts Healthcare and Rewalk Robotics

-0.61

Correlation Coefficient

Allscripts Healthcare  Rewalk Robotics

Excellent diversification

The 3 months correlation between Allscripts and Rewalk is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Allscripts Healthcare Solution and Rewalk Robotics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rewalk Robotics and Allscripts Healthcare 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 Allscripts Healthcare Solutions are associated (or correlated) with Rewalk Robotics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rewalk Robotics has no effect on the direction of Allscripts Healthcare i.e., Allscripts Healthcare and Rewalk Robotics go up and down completely randomly.

Pair Corralation between Allscripts Healthcare and Rewalk Robotics

Given the investment horizon of 90 days Allscripts Healthcare Solutions is expected to under-perform the Rewalk Robotics. But the pink sheet apears to be less risky and, when comparing its historical volatility, Allscripts Healthcare Solutions is 1.52 times less risky than Rewalk Robotics. The pink sheet trades about -0.11 of its potential returns per unit of risk. The Rewalk Robotics is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  58.00  in Rewalk Robotics on January 24, 2024 and sell it today you would earn a total of  47.00  from holding Rewalk Robotics or generate 81.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	86.63%
Values	Daily Returns

Allscripts Healthcare Solution  vs.  Rewalk Robotics

Allscripts Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Allscripts Healthcare Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Rewalk Robotics

Risk-Adjusted Performance

0 of 100

Excellent

Over the last 90 days Rewalk Robotics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite abnormal essential indicators, Rewalk Robotics disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Allscripts Healthcare and Rewalk Robotics

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

The idea behind Allscripts Healthcare Solutions and Rewalk Robotics 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.