Correlation Between Pro Dex and Streamline Health

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

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

Diversification Opportunities for Pro Dex and Streamline Health

-0.62

Correlation Coefficient

Pro Dex  Streamline Health

Excellent diversification

The 3 months correlation between Pro and Streamline is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Pro Dex and Streamline Health Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Streamline Health and Pro Dex 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 Pro Dex are associated (or correlated) with Streamline Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Streamline Health has no effect on the direction of Pro Dex i.e., Pro Dex and Streamline Health go up and down completely randomly.

Pair Corralation between Pro Dex and Streamline Health

Given the investment horizon of 90 days Pro Dex is expected to generate 0.41 times more return on investment than Streamline Health. However, Pro Dex is 2.42 times less risky than Streamline Health. It trades about 0.14 of its potential returns per unit of risk. Streamline Health Solutions is currently generating about 0.01 per unit of risk. If you would invest  1,735  in Pro Dex on August 17, 2024 and sell it today you would earn a total of  3,046  from holding Pro Dex or generate 175.56% return on investment over 90 days.

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

Pro Dex  vs.  Streamline Health Solutions

Pro Dex

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pro Dex are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating technical and fundamental indicators, Pro Dex showed solid returns over the last few months and may actually be approaching a breakup point.

Streamline Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Streamline Health Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Pro Dex and Streamline Health

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

The idea behind Pro Dex and Streamline Health Solutions 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..