Correlation Between NEW PACIFIC and FEMALE HEALTH

Can any of the company-specific risk be diversified away by investing in both NEW PACIFIC and FEMALE 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 NEW PACIFIC and FEMALE HEALTH into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NEW PACIFIC METALS and FEMALE HEALTH, you can compare the effects of market volatilities on NEW PACIFIC and FEMALE 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 NEW PACIFIC with a short position of FEMALE HEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEW PACIFIC and FEMALE HEALTH.

Diversification Opportunities for NEW PACIFIC and FEMALE HEALTH

0.35

Correlation Coefficient

NEW PACIFIC  FEMALE HEALTH

Weak diversification

The 3 months correlation between NEW and FEMALE is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding NEW PACIFIC METALS and FEMALE HEALTH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FEMALE HEALTH and NEW PACIFIC 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 NEW PACIFIC METALS are associated (or correlated) with FEMALE HEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FEMALE HEALTH has no effect on the direction of NEW PACIFIC i.e., NEW PACIFIC and FEMALE HEALTH go up and down completely randomly.

Pair Corralation between NEW PACIFIC and FEMALE HEALTH

Assuming the 90 days trading horizon NEW PACIFIC METALS is expected to under-perform the FEMALE HEALTH. In addition to that, NEW PACIFIC is 1.82 times more volatile than FEMALE HEALTH. It trades about -0.08 of its total potential returns per unit of risk. FEMALE HEALTH is currently generating about 0.12 per unit of volatility. If you would invest  65.00  in FEMALE HEALTH on October 11, 2024 and sell it today you would earn a total of  6.00  from holding FEMALE HEALTH or generate 9.23% return on investment over 90 days.

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

NEW PACIFIC METALS  vs.  FEMALE HEALTH

NEW PACIFIC METALS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NEW PACIFIC METALS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

FEMALE HEALTH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FEMALE HEALTH has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, FEMALE HEALTH is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with NEW PACIFIC and FEMALE HEALTH

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

The idea behind NEW PACIFIC METALS and FEMALE HEALTH 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.