Correlation Between Active Health and Allied Energy
Can any of the company-specific risk be diversified away by investing in both Active Health and Allied Energy 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 Active Health and Allied Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Active Health Foods and Allied Energy, you can compare the effects of market volatilities on Active Health and Allied Energy 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 Active Health with a short position of Allied Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Active Health and Allied Energy.
Diversification Opportunities for Active Health and Allied Energy
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Active and Allied is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Active Health Foods and Allied Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allied Energy and Active 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 Active Health Foods are associated (or correlated) with Allied Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allied Energy has no effect on the direction of Active Health i.e., Active Health and Allied Energy go up and down completely randomly.
Pair Corralation between Active Health and Allied Energy
Given the investment horizon of 90 days Active Health Foods is expected to under-perform the Allied Energy. But the pink sheet apears to be less risky and, when comparing its historical volatility, Active Health Foods is 2.02 times less risky than Allied Energy. The pink sheet trades about -0.15 of its potential returns per unit of risk. The Allied Energy is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 0.62 in Allied Energy on August 25, 2024 and sell it today you would earn a total of 0.71 from holding Allied Energy or generate 114.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.78% |
| Values | Daily Returns |
Active Health Foods vs. Allied Energy
Performance |
| Timeline |
| Active Health Foods |
| Allied Energy |
Active Health and Allied Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Active Health and Allied Energy
The main advantage of trading using opposite Active Health and Allied Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Active Health position performs unexpectedly, Allied Energy 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 Allied Energy will offset losses from the drop in Allied Energy's long position.| Active Health vs. Ventana Biotech | Active Health vs. Gold Ent Group | Active Health vs. Profitable Develop | Active Health vs. American Leisure Holdings |
| Allied Energy vs. Absolute Health and | Allied Energy vs. China Health Management | Allied Energy vs. Embrace Change Acquisition | Allied Energy vs. TransAKT |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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