Correlation Between ALEFARM BREWING and National Health

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

By analyzing existing cross correlation between ALEFARM BREWING DK 05 and National Health Investors, you can compare the effects of market volatilities on ALEFARM BREWING and National 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 ALEFARM BREWING with a short position of National Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALEFARM BREWING and National Health.

Diversification Opportunities for ALEFARM BREWING and National Health

0.01

Correlation Coefficient

ALEFARM BREWING  National Health

Significant diversification

The 3 months correlation between ALEFARM and National is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding ALEFARM BREWING DK 05 and National Health Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Health Investors and ALEFARM BREWING 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 ALEFARM BREWING DK 05 are associated (or correlated) with National Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Health Investors has no effect on the direction of ALEFARM BREWING i.e., ALEFARM BREWING and National Health go up and down completely randomly.

Pair Corralation between ALEFARM BREWING and National Health

Assuming the 90 days horizon ALEFARM BREWING DK 05 is expected to under-perform the National Health. In addition to that, ALEFARM BREWING is 2.39 times more volatile than National Health Investors. It trades about -0.03 of its total potential returns per unit of risk. National Health Investors is currently generating about -0.03 per unit of volatility. If you would invest  7,359  in National Health Investors on September 12, 2024 and sell it today you would lose (359.00) from holding National Health Investors or give up 4.88% of portfolio value over 90 days.

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

ALEFARM BREWING DK 05  vs.  National Health Investors

ALEFARM BREWING DK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ALEFARM BREWING DK 05 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile 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.

National Health Investors

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Health Investors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, National Health is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with ALEFARM BREWING and National Health

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

The idea behind ALEFARM BREWING DK 05 and National Health Investors 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.