Correlation Between HealthStream and Healthcare Triangle

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

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

Diversification Opportunities for HealthStream and Healthcare Triangle

0.28

Correlation Coefficient

HealthStream  Healthcare Triangle

Modest diversification

The 3 months correlation between HealthStream and Healthcare is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding HealthStream and Healthcare Triangle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthcare Triangle 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 Healthcare Triangle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Healthcare Triangle has no effect on the direction of HealthStream i.e., HealthStream and Healthcare Triangle go up and down completely randomly.

Pair Corralation between HealthStream and Healthcare Triangle

Given the investment horizon of 90 days HealthStream is expected to generate 0.09 times more return on investment than Healthcare Triangle. However, HealthStream is 10.63 times less risky than Healthcare Triangle. It trades about 0.05 of its potential returns per unit of risk. Healthcare Triangle is currently generating about -0.06 per unit of risk. If you would invest  3,276  in HealthStream on February 3, 2025 and sell it today you would earn a total of  131.00  from holding HealthStream or generate 4.0% return on investment over 90 days.

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

HealthStream  vs.  Healthcare Triangle

HealthStream

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HealthStream are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, HealthStream is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Healthcare Triangle

Risk-Adjusted Performance

Very Weak

Over the last 90 days Healthcare Triangle has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in June 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with HealthStream and Healthcare Triangle

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

The idea behind HealthStream and Healthcare Triangle 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.