Correlation Between Active Health and Ventana Biotech
Can any of the company-specific risk be diversified away by investing in both Active Health and Ventana Biotech 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 Ventana Biotech 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 Ventana Biotech, you can compare the effects of market volatilities on Active Health and Ventana Biotech 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 Ventana Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Active Health and Ventana Biotech.
Diversification Opportunities for Active Health and Ventana Biotech
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Active and Ventana is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Active Health Foods and Ventana Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ventana Biotech 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 Ventana Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ventana Biotech has no effect on the direction of Active Health i.e., Active Health and Ventana Biotech go up and down completely randomly.
Pair Corralation between Active Health and Ventana Biotech
Given the investment horizon of 90 days Active Health Foods is expected to generate 1.19 times more return on investment than Ventana Biotech. However, Active Health is 1.19 times more volatile than Ventana Biotech. It trades about 0.06 of its potential returns per unit of risk. Ventana Biotech is currently generating about 0.06 per unit of risk. If you would invest 0.03 in Active Health Foods on August 26, 2024 and sell it today you would lose (0.02) from holding Active Health Foods or give up 66.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Active Health Foods vs. Ventana Biotech
Performance |
| Timeline |
| Active Health Foods |
| Ventana Biotech |
Active Health and Ventana Biotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Active Health and Ventana Biotech
The main advantage of trading using opposite Active Health and Ventana Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Active Health position performs unexpectedly, Ventana Biotech 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 Ventana Biotech will offset losses from the drop in Ventana Biotech'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 |
| Ventana Biotech vs. Active Health Foods | Ventana Biotech vs. Gold Ent Group | Ventana Biotech vs. Profitable Develop | Ventana Biotech vs. American Leisure Holdings |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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