Correlation Between HealthStream and IKNA Old

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

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

Diversification Opportunities for HealthStream and IKNA Old

0.34

Correlation Coefficient

HealthStream  IKNA Old

Weak diversification

The 3 months correlation between HealthStream and IKNA is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding HealthStream and IKNA Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IKNA Old 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 IKNA Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IKNA Old has no effect on the direction of HealthStream i.e., HealthStream and IKNA Old go up and down completely randomly.

Pair Corralation between HealthStream and IKNA Old

Given the investment horizon of 90 days HealthStream is expected to generate 5.71 times less return on investment than IKNA Old. But when comparing it to its historical volatility, HealthStream is 3.2 times less risky than IKNA Old. It trades about 0.07 of its potential returns per unit of risk. IKNA Old is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,584  in IKNA Old on July 1, 2025 and sell it today you would earn a total of  132.00  from holding IKNA Old or generate 8.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	29.69%
Values	Daily Returns

HealthStream  vs.  IKNA Old

HealthStream

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in HealthStream are ranked lower than 5 (%) 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 current stock price disarray, may contribute to short-term losses for the investors.

IKNA Old

Risk-Adjusted Performance

Fair

Over the last 90 days IKNA Old has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat conflicting basic indicators, IKNA Old sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HealthStream and IKNA Old

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

The idea behind HealthStream and IKNA Old 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.