Correlation Between Definitive Healthcare and Predictive Oncology

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

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

Diversification Opportunities for Definitive Healthcare and Predictive Oncology

-0.61

Correlation Coefficient

Definitive Healthcare  Predictive Oncology

Excellent diversification

The 3 months correlation between Definitive and Predictive is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Definitive Healthcare Corp and Predictive Oncology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Predictive Oncology and Definitive 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 Definitive Healthcare Corp are associated (or correlated) with Predictive Oncology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Predictive Oncology has no effect on the direction of Definitive Healthcare i.e., Definitive Healthcare and Predictive Oncology go up and down completely randomly.

Pair Corralation between Definitive Healthcare and Predictive Oncology

Allowing for the 90-day total investment horizon Definitive Healthcare Corp is expected to generate 1.17 times more return on investment than Predictive Oncology. However, Definitive Healthcare is 1.17 times more volatile than Predictive Oncology. It trades about 0.16 of its potential returns per unit of risk. Predictive Oncology is currently generating about -0.02 per unit of risk. If you would invest  251.00  in Definitive Healthcare Corp on April 20, 2025 and sell it today you would earn a total of  133.00  from holding Definitive Healthcare Corp or generate 52.99% return on investment over 90 days.

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

Definitive Healthcare Corp  vs.  Predictive Oncology

Definitive Healthcare

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Definitive Healthcare Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, Definitive Healthcare demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Predictive Oncology

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Definitive Healthcare and Predictive Oncology

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

The idea behind Definitive Healthcare Corp and Predictive Oncology 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.