Correlation Between National Health and Global Tech
Can any of the company-specific risk be diversified away by investing in both National Health and Global Tech 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 National Health and Global Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Health Scan and Global Tech Industries, you can compare the effects of market volatilities on National Health and Global Tech 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 National Health with a short position of Global Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Health and Global Tech.
Diversification Opportunities for National Health and Global Tech
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between National and Global is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding National Health Scan and Global Tech Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Tech Industries and National 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 National Health Scan are associated (or correlated) with Global Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Tech Industries has no effect on the direction of National Health i.e., National Health and Global Tech go up and down completely randomly.
Pair Corralation between National Health and Global Tech
Given the investment horizon of 90 days National Health is expected to generate 5.43 times less return on investment than Global Tech. But when comparing it to its historical volatility, National Health Scan is 3.96 times less risky than Global Tech. It trades about 0.07 of its potential returns per unit of risk. Global Tech Industries is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 140.00 in Global Tech Industries on September 1, 2024 and sell it today you would lose (136.99) from holding Global Tech Industries or give up 97.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.78% |
| Values | Daily Returns |
National Health Scan vs. Global Tech Industries
Performance |
| Timeline |
| National Health Scan |
| Global Tech Industries |
National Health and Global Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Health and Global Tech
The main advantage of trading using opposite National Health and Global Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Health position performs unexpectedly, Global Tech 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 Global Tech will offset losses from the drop in Global Tech's long position.| National Health vs. Emergent Health Corp | National Health vs. One World Universe | National Health vs. Nextmart | National Health vs. HeadsUp Entertainment International |
| Global Tech vs. Seychelle Environmtl | Global Tech vs. Energy and Water | Global Tech vs. One World Universe | Global Tech vs. Vow ASA |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Stocks Directory Find actively traded stocks across global markets | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities |