Correlation Between Spineguard and Neolife SA

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

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

Diversification Opportunities for Spineguard and Neolife SA

-0.26

Correlation Coefficient

Spineguard  Neolife SA

Very good diversification

The 3 months correlation between Spineguard and Neolife is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Spineguard and Neolife SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neolife SA and Spineguard 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 Spineguard are associated (or correlated) with Neolife SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neolife SA has no effect on the direction of Spineguard i.e., Spineguard and Neolife SA go up and down completely randomly.

Pair Corralation between Spineguard and Neolife SA

Assuming the 90 days trading horizon Spineguard is expected to generate 1.93 times more return on investment than Neolife SA. However, Spineguard is 1.93 times more volatile than Neolife SA. It trades about 0.16 of its potential returns per unit of risk. Neolife SA is currently generating about 0.12 per unit of risk. If you would invest  22.00  in Spineguard on October 13, 2024 and sell it today you would earn a total of  3.00  from holding Spineguard or generate 13.64% return on investment over 90 days.

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

Spineguard  vs.  Neolife SA

Spineguard

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spineguard has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Spineguard is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Neolife SA

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Neolife SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Neolife SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Spineguard and Neolife SA

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

The idea behind Spineguard and Neolife SA 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.