How Illnesses Could Predict the Stock Market
Can illness trends predict a company’s revenue or profit margin? Yes. In fact, the correlation with flu data can be as strong as -1.0r (out of a perfect 1.0r or -1.0r) for some healthcare businesses and their financial performance according to a recent Sickweather study.
Sickweather, the world’s first real-time map of human health, collects and processes millions of illness reports each month to deliver a hyper-local view of what’s going around in a specific area. Flu, allergies and 35 other illnesses are tracked across the country and around the world.
To conduct the study, 855 publicly traded healthcare companies whose bottom line could potentially be affected by flu and allergy seasons were selected. Three years’ worth of information regarding each company’s quarterly earnings was gathered from US Securities and Exchange Commission (SEC). Sickweather flu and allergy data for the same period was overlaid with variations of Basic Earnings per Share (EPS), Total Revenue, Profit Margin, Price to Earnings Ratio (P/E ratio), and Return on Equity.
Study outcomes showed there were correlations > 0.50r or < -0.50r between both illnesses and the financial metrics for 16% of the companies sampled.
“Given Sickweather’s ability to forecast flu & allergy seasons up to 15 weeks in advance, this would provide a predictive and potentially prescriptive model for a wide range of healthcare organizations,” said Graham Dodge, CEO, Sickweather.
While this was a limited study, the idea of using illness forecast data to develop more in-depth financial correlations could be extremely valuable for companies and stock traders. The information could be used to adjust their business model to account for illnesses affecting their sales, workforce or supply chain activities.
Additional details about these findings will be shared at Sickweather’s upcoming Cold Cough Flu Conference in Kansas City on October 15th, along with their forecast and outlook of the upcoming flu season. The published results of the study are available here: http://sick.io/stocks
To learn more about Sickweather’s illness forecasting capabilities and Cold Cough Flu Conference, visit http://sick.io/ccf.
