Correlation Between Active Health and Premier Products
Can any of the company-specific risk be diversified away by investing in both Active Health and Premier Products 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 Premier Products 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 Premier Products Group, you can compare the effects of market volatilities on Active Health and Premier Products 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 Premier Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Active Health and Premier Products.
Diversification Opportunities for Active Health and Premier Products
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Active and Premier is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Active Health Foods and Premier Products Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premier Products 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 Premier Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premier Products has no effect on the direction of Active Health i.e., Active Health and Premier Products go up and down completely randomly.
Pair Corralation between Active Health and Premier Products
Given the investment horizon of 90 days Active Health Foods is expected to generate 3.16 times more return on investment than Premier Products. However, Active Health is 3.16 times more volatile than Premier Products Group. It trades about 0.07 of its potential returns per unit of risk. Premier Products Group is currently generating about 0.06 per unit of risk. If you would invest 0.02 in Active Health Foods on August 30, 2024 and sell it today you would lose (0.01) from holding Active Health Foods or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Active Health Foods vs. Premier Products Group
Performance |
| Timeline |
| Active Health Foods |
| Premier Products |
Active Health and Premier Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Active Health and Premier Products
The main advantage of trading using opposite Active Health and Premier Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Active Health position performs unexpectedly, Premier Products 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 Premier Products will offset losses from the drop in Premier Products' long position.| Active Health vs. Embotelladora Andina SA | Active Health vs. Signet International Holdings | Active Health vs. National Beverage Corp | Active Health vs. PT Astra International |
| Premier Products vs. Green Planet Bio | Premier Products vs. Azure Holding Group | Premier Products vs. Four Leaf Acquisition | Premier Products vs. Opus Magnum Ameris |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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