Correlation Between GUARDANT HEALTH and LABOCANNA

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

By analyzing existing cross correlation between GUARDANT HEALTH CL and LABOCANNA SA ZY 10, you can compare the effects of market volatilities on GUARDANT HEALTH and LABOCANNA 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 GUARDANT HEALTH with a short position of LABOCANNA. Check out your portfolio center. Please also check ongoing floating volatility patterns of GUARDANT HEALTH and LABOCANNA.

Diversification Opportunities for GUARDANT HEALTH and LABOCANNA

0.03

Correlation Coefficient

GUARDANT HEALTH  LABOCANNA

Significant diversification

The 3 months correlation between GUARDANT and LABOCANNA is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding GUARDANT HEALTH CL and LABOCANNA SA ZY 10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LABOCANNA SA ZY and GUARDANT 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 GUARDANT HEALTH CL are associated (or correlated) with LABOCANNA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LABOCANNA SA ZY has no effect on the direction of GUARDANT HEALTH i.e., GUARDANT HEALTH and LABOCANNA go up and down completely randomly.

Pair Corralation between GUARDANT HEALTH and LABOCANNA

Assuming the 90 days horizon GUARDANT HEALTH CL is expected to generate 1.25 times more return on investment than LABOCANNA. However, GUARDANT HEALTH is 1.25 times more volatile than LABOCANNA SA ZY 10. It trades about 0.13 of its potential returns per unit of risk. LABOCANNA SA ZY 10 is currently generating about 0.07 per unit of risk. If you would invest  3,000  in GUARDANT HEALTH CL on December 31, 2024 and sell it today you would earn a total of  1,115  from holding GUARDANT HEALTH CL or generate 37.17% return on investment over 90 days.

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

GUARDANT HEALTH CL  vs.  LABOCANNA SA ZY 10

GUARDANT HEALTH CL

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GUARDANT HEALTH CL are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, GUARDANT HEALTH reported solid returns over the last few months and may actually be approaching a breakup point.

LABOCANNA SA ZY

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in LABOCANNA SA ZY 10 are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, LABOCANNA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GUARDANT HEALTH and LABOCANNA

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

The idea behind GUARDANT HEALTH CL and LABOCANNA SA ZY 10 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.