Correlation Between Pacific Health and Vroom

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

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

Diversification Opportunities for Pacific Health and Vroom

0.43

Correlation Coefficient

Pacific Health  Vroom

Very weak diversification

The 3 months correlation between Pacific and Vroom is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Health Care and Vroom Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vroom Inc and Pacific Health 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 Pacific Health Care are associated (or correlated) with Vroom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vroom Inc has no effect on the direction of Pacific Health i.e., Pacific Health and Vroom go up and down completely randomly.

Pair Corralation between Pacific Health and Vroom

Given the investment horizon of 90 days Pacific Health Care is expected to generate 0.32 times more return on investment than Vroom. However, Pacific Health Care is 3.17 times less risky than Vroom. It trades about 0.0 of its potential returns per unit of risk. Vroom Inc is currently generating about -0.1 per unit of risk. If you would invest  77.00  in Pacific Health Care on January 20, 2024 and sell it today you would lose (4.00) from holding Pacific Health Care or give up 5.19% of portfolio value over 90 days.

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

Pacific Health Care  vs.  Vroom Inc

Pacific Health Care

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pacific Health Care are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal technical indicators, Pacific Health may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Vroom Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vroom Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in May 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Pacific Health and Vroom

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

The idea behind Pacific Health Care and Vroom Inc 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.