Correlation Between Cardinal Health and Design Therapeutics

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

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

Diversification Opportunities for Cardinal Health and Design Therapeutics

-0.25

Correlation Coefficient

Cardinal Health  Design Therapeutics

Very good diversification

The 3 months correlation between Cardinal and Design is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and Design Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Design Therapeutics and Cardinal 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 Cardinal Health are associated (or correlated) with Design Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Design Therapeutics has no effect on the direction of Cardinal Health i.e., Cardinal Health and Design Therapeutics go up and down completely randomly.

Pair Corralation between Cardinal Health and Design Therapeutics

Considering the 90-day investment horizon Cardinal Health is expected to generate 0.25 times more return on investment than Design Therapeutics. However, Cardinal Health is 3.98 times less risky than Design Therapeutics. It trades about 0.05 of its potential returns per unit of risk. Design Therapeutics is currently generating about -0.02 per unit of risk. If you would invest  15,153  in Cardinal Health on May 4, 2025 and sell it today you would earn a total of  447.00  from holding Cardinal Health or generate 2.95% return on investment over 90 days.

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

Cardinal Health  vs.  Design Therapeutics

Cardinal Health

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cardinal Health are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Cardinal Health is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Design Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Design Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Cardinal Health and Design Therapeutics

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

The idea behind Cardinal Health and Design Therapeutics 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 AI Portfolio Prophet module to use AI to generate optimal portfolios and find profitable investment opportunities.