Correlation Between Andon Health and GRINM Semiconductor

Can any of the company-specific risk be diversified away by investing in both Andon Health and GRINM Semiconductor 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 Andon Health and GRINM Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Andon Health Co and GRINM Semiconductor Materials, you can compare the effects of market volatilities on Andon Health and GRINM Semiconductor 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 Andon Health with a short position of GRINM Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Andon Health and GRINM Semiconductor.

Diversification Opportunities for Andon Health and GRINM Semiconductor

0.74

Correlation Coefficient

Andon Health  GRINM Semiconductor

Poor diversification

The 3 months correlation between Andon and GRINM is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Andon Health Co and GRINM Semiconductor Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GRINM Semiconductor and Andon 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 Andon Health Co are associated (or correlated) with GRINM Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GRINM Semiconductor has no effect on the direction of Andon Health i.e., Andon Health and GRINM Semiconductor go up and down completely randomly.

Pair Corralation between Andon Health and GRINM Semiconductor

Assuming the 90 days trading horizon Andon Health Co is expected to generate 0.73 times more return on investment than GRINM Semiconductor. However, Andon Health Co is 1.38 times less risky than GRINM Semiconductor. It trades about -0.01 of its potential returns per unit of risk. GRINM Semiconductor Materials is currently generating about -0.01 per unit of risk. If you would invest  4,770  in Andon Health Co on October 11, 2024 and sell it today you would lose (775.00) from holding Andon Health Co or give up 16.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Andon Health Co  vs.  GRINM Semiconductor Materials

Andon Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Andon Health Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Andon Health is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

GRINM Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GRINM Semiconductor Materials has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Andon Health and GRINM Semiconductor

The main advantage of trading using opposite Andon Health and GRINM Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Andon Health position performs unexpectedly, GRINM Semiconductor 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 GRINM Semiconductor will offset losses from the drop in GRINM Semiconductor's long position.

The idea behind Andon Health Co and GRINM Semiconductor Materials 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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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.