Correlation Between Hello and HealthEquity

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

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

Diversification Opportunities for Hello and HealthEquity

0.49

Correlation Coefficient

Hello  HealthEquity

Very weak diversification

The 3 months correlation between Hello and HealthEquity is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Hello Group and HealthEquity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HealthEquity and Hello 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 Hello Group are associated (or correlated) with HealthEquity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HealthEquity has no effect on the direction of Hello i.e., Hello and HealthEquity go up and down completely randomly.

Pair Corralation between Hello and HealthEquity

Given the investment horizon of 90 days Hello Group is expected to generate 2.74 times more return on investment than HealthEquity. However, Hello is 2.74 times more volatile than HealthEquity. It trades about 0.05 of its potential returns per unit of risk. HealthEquity is currently generating about 0.05 per unit of risk. If you would invest  539.00  in Hello Group on January 25, 2024 and sell it today you would earn a total of  33.00  from holding Hello Group or generate 6.12% return on investment over 90 days.

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

Hello Group  vs.  HealthEquity

Hello Group

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hello Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Hello may actually be approaching a critical reversion point that can send shares even higher in May 2024.

HealthEquity

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HealthEquity are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, HealthEquity is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Hello and HealthEquity

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

The idea behind Hello Group and HealthEquity 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.