Correlation Between WIMFARM SA and Natural Health

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

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

Diversification Opportunities for WIMFARM SA and Natural Health

0.31

Correlation Coefficient

WIMFARM SA  Natural Health

Weak diversification

The 3 months correlation between WIMFARM and Natural is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding WIMFARM SA EO 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 WIMFARM SA 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 WIMFARM SA EO 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 WIMFARM SA i.e., WIMFARM SA and Natural Health go up and down completely randomly.

Pair Corralation between WIMFARM SA and Natural Health

Assuming the 90 days horizon WIMFARM SA is expected to generate 1.93 times less return on investment than Natural Health. In addition to that, WIMFARM SA is 1.77 times more volatile than Natural Health Trends. It trades about 0.03 of its total potential returns per unit of risk. Natural Health Trends is currently generating about 0.1 per unit of volatility. If you would invest  400.00  in Natural Health Trends on December 28, 2024 and sell it today you would earn a total of  64.00  from holding Natural Health Trends or generate 16.0% return on investment over 90 days.

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

WIMFARM SA EO  vs.  Natural Health Trends

WIMFARM SA EO

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in WIMFARM SA EO are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, WIMFARM SA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Natural Health Trends

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Natural Health Trends are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Natural Health unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WIMFARM SA and Natural Health

The main advantage of trading using opposite WIMFARM SA and Natural Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WIMFARM SA 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 WIMFARM SA EO 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 Global Correlations module to find global opportunities by holding instruments from different markets.