Correlation Between NMC Health and Veltex
Can any of the company-specific risk be diversified away by investing in both NMC Health and Veltex 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 NMC Health and Veltex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMC Health PLC and Veltex, you can compare the effects of market volatilities on NMC Health and Veltex 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 NMC Health with a short position of Veltex. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMC Health and Veltex.
Diversification Opportunities for NMC Health and Veltex
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between NMC and Veltex is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding NMC Health PLC and Veltex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veltex and NMC 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 NMC Health PLC are associated (or correlated) with Veltex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veltex has no effect on the direction of NMC Health i.e., NMC Health and Veltex go up and down completely randomly.
Pair Corralation between NMC Health and Veltex
Assuming the 90 days horizon NMC Health PLC is expected to under-perform the Veltex. In addition to that, NMC Health is 1.04 times more volatile than Veltex. It trades about -0.12 of its total potential returns per unit of risk. Veltex is currently generating about 0.03 per unit of volatility. If you would invest 32.00 in Veltex on September 27, 2024 and sell it today you would lose (24.11) from holding Veltex or give up 75.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 31.69% |
| Values | Daily Returns |
NMC Health PLC vs. Veltex
Performance |
| Timeline |
| NMC Health PLC |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Veltex |
NMC Health and Veltex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMC Health and Veltex
The main advantage of trading using opposite NMC Health and Veltex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMC Health position performs unexpectedly, Veltex 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 Veltex will offset losses from the drop in Veltex's long position.| NMC Health vs. Veltex | NMC Health vs. Numinus Wellness | NMC Health vs. IMAC Holdings | NMC Health vs. P3 Health Partners |
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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