Correlation Between Active Health and Capital Financial

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

By analyzing existing cross correlation between Active Health Foods and Capital Financial Gl, you can compare the effects of market volatilities on Active Health and Capital Financial 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 Active Health with a short position of Capital Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Active Health and Capital Financial.

Diversification Opportunities for Active Health and Capital Financial

1.0

Correlation Coefficient

Active Health  Capital Financial

No risk reduction

The 3 months correlation between Active and Capital is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Active Health Foods and Capital Financial Gl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Financial and Active 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 Active Health Foods are associated (or correlated) with Capital Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Financial has no effect on the direction of Active Health i.e., Active Health and Capital Financial go up and down completely randomly.

Pair Corralation between Active Health and Capital Financial

If you would invest  0.01  in Capital Financial Gl on December 29, 2024 and sell it today you would earn a total of  0.00  from holding Capital Financial Gl or generate 0.0% return on investment over 90 days.

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

Active Health Foods  vs.  Capital Financial Gl

Active Health Foods

Risk-Adjusted Performance

Very Weak

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

Capital Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Capital Financial Gl has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Capital Financial is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Active Health and Capital Financial

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

The idea behind Active Health Foods and Capital Financial Gl 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.

Check out your portfolio center.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.