Correlation Between Target Healthcare and PureTech Health

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

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

Diversification Opportunities for Target Healthcare and PureTech Health

0.05

Correlation Coefficient

Target Healthcare  PureTech Health

Significant diversification

The 3 months correlation between Target and PureTech is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Target Healthcare REIT and PureTech Health plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PureTech Health plc and Target 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 Target Healthcare REIT are associated (or correlated) with PureTech Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PureTech Health plc has no effect on the direction of Target Healthcare i.e., Target Healthcare and PureTech Health go up and down completely randomly.

Pair Corralation between Target Healthcare and PureTech Health

Assuming the 90 days trading horizon Target Healthcare is expected to generate 9.98 times less return on investment than PureTech Health. But when comparing it to its historical volatility, Target Healthcare REIT is 1.87 times less risky than PureTech Health. It trades about 0.02 of its potential returns per unit of risk. PureTech Health plc is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  12,560  in PureTech Health plc on April 25, 2025 and sell it today you would earn a total of  1,340  from holding PureTech Health plc or generate 10.67% return on investment over 90 days.

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

Target Healthcare REIT  vs.  PureTech Health plc

Target Healthcare REIT

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Target Healthcare REIT are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Target Healthcare is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

PureTech Health plc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PureTech Health plc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, PureTech Health may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Target Healthcare and PureTech Health

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

The idea behind Target Healthcare REIT and PureTech Health plc 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.