Correlation Between Health Biotchnology and Simt High
Can any of the company-specific risk be diversified away by investing in both Health Biotchnology and Simt High 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 Health Biotchnology and Simt High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Health Biotchnology Portfolio and Simt High Yield, you can compare the effects of market volatilities on Health Biotchnology and Simt High 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 Health Biotchnology with a short position of Simt High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Health Biotchnology and Simt High.
Diversification Opportunities for Health Biotchnology and Simt High
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between HEALTH and Simt is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Health Biotchnology Portfolio and Simt High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simt High Yield and Health Biotchnology 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 Health Biotchnology Portfolio are associated (or correlated) with Simt High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simt High Yield has no effect on the direction of Health Biotchnology i.e., Health Biotchnology and Simt High go up and down completely randomly.
Pair Corralation between Health Biotchnology and Simt High
Assuming the 90 days horizon Health Biotchnology Portfolio is expected to generate 5.17 times more return on investment than Simt High. However, Health Biotchnology is 5.17 times more volatile than Simt High Yield. It trades about 0.05 of its potential returns per unit of risk. Simt High Yield is currently generating about 0.18 per unit of risk. If you would invest 2,434 in Health Biotchnology Portfolio on August 30, 2024 and sell it today you would earn a total of 26.00 from holding Health Biotchnology Portfolio or generate 1.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Health Biotchnology Portfolio vs. Simt High Yield
Performance |
| Timeline |
| Health Biotchnology |
| Simt High Yield |
Health Biotchnology and Simt High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Health Biotchnology and Simt High
The main advantage of trading using opposite Health Biotchnology and Simt High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Health Biotchnology position performs unexpectedly, Simt High 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 Simt High will offset losses from the drop in Simt High's long position.The idea behind Health Biotchnology Portfolio and Simt High Yield pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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