Correlation Between Absolute Health and New Generation
Can any of the company-specific risk be diversified away by investing in both Absolute Health and New Generation 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 Absolute Health and New Generation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Absolute Health and and New Generation Consumer, you can compare the effects of market volatilities on Absolute Health and New Generation 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 Absolute Health with a short position of New Generation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absolute Health and New Generation.
Diversification Opportunities for Absolute Health and New Generation
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Absolute and New is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Absolute Health and and New Generation Consumer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Generation Consumer and Absolute 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 Absolute Health and are associated (or correlated) with New Generation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Generation Consumer has no effect on the direction of Absolute Health i.e., Absolute Health and New Generation go up and down completely randomly.
Pair Corralation between Absolute Health and New Generation
Given the investment horizon of 90 days Absolute Health and is expected to generate 4.92 times more return on investment than New Generation. However, Absolute Health is 4.92 times more volatile than New Generation Consumer. It trades about 0.05 of its potential returns per unit of risk. New Generation Consumer is currently generating about 0.03 per unit of risk. If you would invest 0.80 in Absolute Health and on August 29, 2024 and sell it today you would lose (0.79) from holding Absolute Health and or give up 98.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Absolute Health and vs. New Generation Consumer
Performance |
| Timeline |
| Absolute Health |
| New Generation Consumer |
Absolute Health and New Generation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Absolute Health and New Generation
The main advantage of trading using opposite Absolute Health and New Generation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Absolute Health position performs unexpectedly, New Generation 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 New Generation will offset losses from the drop in New Generation's long position.| Absolute Health vs. Gemz Corp | Absolute Health vs. AVVAA World Health | Absolute Health vs. Newron Sport | Absolute Health vs. Tanke Biosciences |
| New Generation vs. Green Planet Bio | New Generation vs. Azure Holding Group | New Generation vs. Four Leaf Acquisition | New Generation 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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