Correlation Between HealthStream and Definitive Healthcare

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

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

Diversification Opportunities for HealthStream and Definitive Healthcare

-0.38

Correlation Coefficient

HealthStream  Definitive Healthcare

Very good diversification

The 3 months correlation between HealthStream and Definitive is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding HealthStream and Definitive Healthcare Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Definitive Healthcare and HealthStream 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 HealthStream are associated (or correlated) with Definitive Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Definitive Healthcare has no effect on the direction of HealthStream i.e., HealthStream and Definitive Healthcare go up and down completely randomly.

Pair Corralation between HealthStream and Definitive Healthcare

Given the investment horizon of 90 days HealthStream is expected to under-perform the Definitive Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, HealthStream is 2.15 times less risky than Definitive Healthcare. The stock trades about -0.06 of its potential returns per unit of risk. The Definitive Healthcare Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  360.00  in Definitive Healthcare Corp on May 13, 2025 and sell it today you would earn a total of  26.00  from holding Definitive Healthcare Corp or generate 7.22% return on investment over 90 days.

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

HealthStream  vs.  Definitive Healthcare Corp

HealthStream

Risk-Adjusted Performance

Weakest

Over the last 90 days HealthStream has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, HealthStream is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Definitive Healthcare

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Definitive Healthcare Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady technical indicators, Definitive Healthcare may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with HealthStream and Definitive Healthcare

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

The idea behind HealthStream and Definitive Healthcare Corp 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.