Correlation Between Naturhouse Health and Optima Health
Can any of the company-specific risk be diversified away by investing in both Naturhouse Health and Optima 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 Naturhouse Health and Optima Health 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 Optima Health plc, you can compare the effects of market volatilities on Naturhouse Health and Optima 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 Naturhouse Health with a short position of Optima Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Naturhouse Health and Optima Health.
Diversification Opportunities for Naturhouse Health and Optima Health
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Naturhouse and Optima is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Naturhouse Health SA and Optima Health plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optima Health plc 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 Optima Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optima Health plc has no effect on the direction of Naturhouse Health i.e., Naturhouse Health and Optima Health go up and down completely randomly.
Pair Corralation between Naturhouse Health and Optima Health
Assuming the 90 days trading horizon Naturhouse Health SA is expected to generate 1.7 times more return on investment than Optima Health. However, Naturhouse Health is 1.7 times more volatile than Optima Health plc. It trades about 0.11 of its potential returns per unit of risk. Optima Health plc is currently generating about -0.29 per unit of risk. If you would invest 164.00 in Naturhouse Health SA on September 1, 2024 and sell it today you would earn a total of 4.00 from holding Naturhouse Health SA or generate 2.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Naturhouse Health SA vs. Optima Health plc
Performance |
| Timeline |
| Naturhouse Health |
| Optima Health plc |
Naturhouse Health and Optima Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Naturhouse Health and Optima Health
The main advantage of trading using opposite Naturhouse Health and Optima Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Naturhouse Health position performs unexpectedly, Optima 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 Optima Health will offset losses from the drop in Optima Health's long position.| Naturhouse Health vs. Uniper SE | Naturhouse Health vs. Mulberry Group PLC | Naturhouse Health vs. London Security Plc | Naturhouse Health vs. Triad Group PLC |
| Optima Health vs. Trainline Plc | Optima Health vs. Allianz Technology Trust | Optima Health vs. Sabien Technology Group | Optima Health vs. Gaztransport et Technigaz |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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