Correlation Between Andlauer Healthcare and NIKE

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

By analyzing existing cross correlation between Andlauer Healthcare Gr and NIKE Inc CDR, you can compare the effects of market volatilities on Andlauer Healthcare and NIKE 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 Andlauer Healthcare with a short position of NIKE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Andlauer Healthcare and NIKE.

Diversification Opportunities for Andlauer Healthcare and NIKE

-0.74

Correlation Coefficient

Andlauer Healthcare  NIKE

Pay attention - limited upside

The 3 months correlation between Andlauer and NIKE is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Andlauer Healthcare Gr and NIKE Inc CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NIKE Inc CDR and Andlauer Healthcare 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 Andlauer Healthcare Gr are associated (or correlated) with NIKE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NIKE Inc CDR has no effect on the direction of Andlauer Healthcare i.e., Andlauer Healthcare and NIKE go up and down completely randomly.

Pair Corralation between Andlauer Healthcare and NIKE

Assuming the 90 days trading horizon Andlauer Healthcare Gr is expected to generate 0.99 times more return on investment than NIKE. However, Andlauer Healthcare Gr is 1.01 times less risky than NIKE. It trades about 0.14 of its potential returns per unit of risk. NIKE Inc CDR is currently generating about -0.26 per unit of risk. If you would invest  4,238  in Andlauer Healthcare Gr on October 8, 2024 and sell it today you would earn a total of  126.00  from holding Andlauer Healthcare Gr or generate 2.97% return on investment over 90 days.

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

Andlauer Healthcare Gr  vs.  NIKE Inc CDR

Andlauer Healthcare

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Andlauer Healthcare Gr are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Andlauer Healthcare displayed solid returns over the last few months and may actually be approaching a breakup point.

NIKE Inc CDR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NIKE Inc CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Andlauer Healthcare and NIKE

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

The idea behind Andlauer Healthcare Gr and NIKE Inc CDR 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.