Correlation Between Apollo Medical and Natural Health

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

By analyzing existing cross correlation between Apollo Medical Holdings and Natural Health Trends, you can compare the effects of market volatilities on Apollo Medical and Natural Health 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 Apollo Medical with a short position of Natural Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apollo Medical and Natural Health.

Diversification Opportunities for Apollo Medical and Natural Health

0.4

Correlation Coefficient

Apollo Medical  Natural Health

Very weak diversification

The 3 months correlation between Apollo and Natural is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Apollo Medical Holdings and Natural Health Trends in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natural Health Trends and Apollo Medical 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 Apollo Medical Holdings are associated (or correlated) with Natural Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natural Health Trends has no effect on the direction of Apollo Medical i.e., Apollo Medical and Natural Health go up and down completely randomly.

Pair Corralation between Apollo Medical and Natural Health

Assuming the 90 days horizon Apollo Medical Holdings is expected to under-perform the Natural Health. But the stock apears to be less risky and, when comparing its historical volatility, Apollo Medical Holdings is 2.74 times less risky than Natural Health. The stock trades about -1.33 of its potential returns per unit of risk. The Natural Health Trends is currently generating about -0.29 of returns per unit of risk over similar time horizon. If you would invest  500.00  in Natural Health Trends on October 4, 2024 and sell it today you would lose (84.00) from holding Natural Health Trends or give up 16.8% of portfolio value over 90 days.

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

Apollo Medical Holdings  vs.  Natural Health Trends

Apollo Medical Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apollo Medical Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Natural Health Trends

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Natural Health Trends has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Apollo Medical and Natural Health

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

The idea behind Apollo Medical Holdings and Natural Health Trends 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.