Correlation Between Chemtrade Logistics and NeuPath Health

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

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

Diversification Opportunities for Chemtrade Logistics and NeuPath Health

-0.27

Correlation Coefficient

Chemtrade Logistics  NeuPath Health

Very good diversification

The 3 months correlation between Chemtrade and NeuPath is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Chemtrade Logistics Income and NeuPath Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NeuPath Health and Chemtrade Logistics 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 Chemtrade Logistics Income are associated (or correlated) with NeuPath Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NeuPath Health has no effect on the direction of Chemtrade Logistics i.e., Chemtrade Logistics and NeuPath Health go up and down completely randomly.

Pair Corralation between Chemtrade Logistics and NeuPath Health

Assuming the 90 days trading horizon Chemtrade Logistics is expected to generate 5.39 times less return on investment than NeuPath Health. But when comparing it to its historical volatility, Chemtrade Logistics Income is 2.74 times less risky than NeuPath Health. It trades about 0.1 of its potential returns per unit of risk. NeuPath Health is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  17.00  in NeuPath Health on September 13, 2024 and sell it today you would earn a total of  3.00  from holding NeuPath Health or generate 17.65% return on investment over 90 days.

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

Chemtrade Logistics Income  vs.  NeuPath Health

Chemtrade Logistics

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chemtrade Logistics Income are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating technical and fundamental indicators, Chemtrade Logistics may actually be approaching a critical reversion point that can send shares even higher in January 2025.

NeuPath Health

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NeuPath Health are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, NeuPath Health showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chemtrade Logistics and NeuPath Health

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

The idea behind Chemtrade Logistics Income and NeuPath Health 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.