Correlation Between Defence Therapeutics and Health Sciences

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

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

Diversification Opportunities for Defence Therapeutics and Health Sciences

0.0

Correlation Coefficient

Defence Therapeutics  Health Sciences

Pay attention - limited upside

The 3 months correlation between Defence and Health is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Defence Therapeutics and Health Sciences Gr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Health Sciences Gr and Defence Therapeutics 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 Defence Therapeutics are associated (or correlated) with Health Sciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Health Sciences Gr has no effect on the direction of Defence Therapeutics i.e., Defence Therapeutics and Health Sciences go up and down completely randomly.

Pair Corralation between Defence Therapeutics and Health Sciences

If you would invest  27.00  in Defence Therapeutics on December 26, 2024 and sell it today you would earn a total of  73.00  from holding Defence Therapeutics or generate 270.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.16%
Values	Daily Returns

Defence Therapeutics  vs.  Health Sciences Gr

Defence Therapeutics

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Defence Therapeutics are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Defence Therapeutics reported solid returns over the last few months and may actually be approaching a breakup point.

Health Sciences Gr

Risk-Adjusted Performance

Very Weak

Over the last 90 days Health Sciences Gr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Health Sciences is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Defence Therapeutics and Health Sciences

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

The idea behind Defence Therapeutics and Health Sciences Gr 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.