Correlation Between Naturhouse Health and European Metals
Can any of the company-specific risk be diversified away by investing in both Naturhouse Health and European Metals 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 Naturhouse Health and European Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Naturhouse Health SA and European Metals Holdings, you can compare the effects of market volatilities on Naturhouse Health and European Metals 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 Naturhouse Health with a short position of European Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Naturhouse Health and European Metals.
Diversification Opportunities for Naturhouse Health and European Metals
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Naturhouse and European is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Naturhouse Health SA and European Metals Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on European Metals Holdings and Naturhouse Health 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 Naturhouse Health SA are associated (or correlated) with European Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of European Metals Holdings has no effect on the direction of Naturhouse Health i.e., Naturhouse Health and European Metals go up and down completely randomly.
Pair Corralation between Naturhouse Health and European Metals
Assuming the 90 days trading horizon Naturhouse Health SA is expected to generate 0.24 times more return on investment than European Metals. However, Naturhouse Health SA is 4.11 times less risky than European Metals. It trades about -0.04 of its potential returns per unit of risk. European Metals Holdings is currently generating about -0.23 per unit of risk. If you would invest 170.00 in Naturhouse Health SA on September 20, 2024 and sell it today you would lose (1.00) from holding Naturhouse Health SA or give up 0.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Naturhouse Health SA vs. European Metals Holdings
Performance |
| Timeline |
| Naturhouse Health |
| European Metals Holdings |
Naturhouse Health and European Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Naturhouse Health and European Metals
The main advantage of trading using opposite Naturhouse Health and European Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Naturhouse Health position performs unexpectedly, European Metals 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 European Metals will offset losses from the drop in European Metals' long position.| Naturhouse Health vs. Samsung Electronics Co | Naturhouse Health vs. Samsung Electronics Co | Naturhouse Health vs. Hyundai Motor | Naturhouse Health vs. Reliance Industries Ltd |
| European Metals vs. Waste Management | European Metals vs. Naturhouse Health SA | European Metals vs. Cardinal Health | European Metals vs. Planet Fitness Cl |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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