Correlation Between Summit Healthcare and Bed Bath

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

By analyzing existing cross correlation between Summit Healthcare Acquisition and Bed Bath Beyond, you can compare the effects of market volatilities on Summit Healthcare and Bed Bath 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 Summit Healthcare with a short position of Bed Bath. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Healthcare and Bed Bath.

Diversification Opportunities for Summit Healthcare and Bed Bath

0.01

Correlation Coefficient

Summit Healthcare  Bed Bath

Significant diversification

The 3 months correlation between Summit and Bed is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Summit Healthcare Acquisition and Bed Bath Beyond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bed Bath Beyond and Summit 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 Summit Healthcare Acquisition are associated (or correlated) with Bed Bath. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bed Bath Beyond has no effect on the direction of Summit Healthcare i.e., Summit Healthcare and Bed Bath go up and down completely randomly.

Pair Corralation between Summit Healthcare and Bed Bath

Given the investment horizon of 90 days Summit Healthcare Acquisition is expected to generate 0.44 times more return on investment than Bed Bath. However, Summit Healthcare Acquisition is 2.28 times less risky than Bed Bath. It trades about 0.3 of its potential returns per unit of risk. Bed Bath Beyond is currently generating about -0.04 per unit of risk. If you would invest  1,019  in Summit Healthcare Acquisition on January 25, 2024 and sell it today you would earn a total of  281.00  from holding Summit Healthcare Acquisition or generate 27.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	14.94%
Values	Daily Returns

Summit Healthcare Acquisition  vs.  Bed Bath Beyond

Summit Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Summit Healthcare Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Summit Healthcare is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Bed Bath Beyond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bed Bath Beyond has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental drivers, Bed Bath is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Summit Healthcare and Bed Bath

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

The idea behind Summit Healthcare Acquisition and Bed Bath Beyond 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 Anywhere module to track or share privately all of your investments from the convenience of any device.