Correlation Between Viemed Healthcare and Item 9

Can any of the company-specific risk be diversified away by investing in both Viemed Healthcare and Item 9 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 Viemed Healthcare and Item 9 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Viemed Healthcare and Item 9 Labs, you can compare the effects of market volatilities on Viemed Healthcare and Item 9 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 Viemed Healthcare with a short position of Item 9. Check out your portfolio center. Please also check ongoing floating volatility patterns of Viemed Healthcare and Item 9.

Diversification Opportunities for Viemed Healthcare and Item 9

0.39

Correlation Coefficient

Viemed Healthcare  Item 9

Weak diversification

The 3 months correlation between Viemed and Item is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Viemed Healthcare and Item 9 Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Item 9 Labs and Viemed 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 Viemed Healthcare are associated (or correlated) with Item 9. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Item 9 Labs has no effect on the direction of Viemed Healthcare i.e., Viemed Healthcare and Item 9 go up and down completely randomly.

Pair Corralation between Viemed Healthcare and Item 9

Considering the 90-day investment horizon Viemed Healthcare is expected to under-perform the Item 9. But the stock apears to be less risky and, when comparing its historical volatility, Viemed Healthcare is 14.53 times less risky than Item 9. The stock trades about -0.07 of its potential returns per unit of risk. The Item 9 Labs is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  0.03  in Item 9 Labs on February 6, 2024 and sell it today you would lose (0.01) from holding Item 9 Labs or give up 33.33% of portfolio value over 90 days.

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

Viemed Healthcare  vs.  Item 9 Labs

Viemed Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Viemed Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Viemed Healthcare is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Item 9 Labs

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Item 9 Labs are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile essential indicators, Item 9 sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Viemed Healthcare and Item 9

The main advantage of trading using opposite Viemed Healthcare and Item 9 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Viemed Healthcare position performs unexpectedly, Item 9 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 Item 9 will offset losses from the drop in Item 9's long position.

The idea behind Viemed Healthcare and Item 9 Labs 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.