Correlation Between Entourage Health and CLS Holdings

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

By analyzing existing cross correlation between Entourage Health Corp and CLS Holdings USA, you can compare the effects of market volatilities on Entourage Health and CLS Holdings 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 Entourage Health with a short position of CLS Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Entourage Health and CLS Holdings.

Diversification Opportunities for Entourage Health and CLS Holdings

0.59

Correlation Coefficient

Entourage Health  CLS Holdings

Very weak diversification

The 3 months correlation between Entourage and CLS is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Entourage Health Corp and CLS Holdings USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CLS Holdings USA and Entourage 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 Entourage Health Corp are associated (or correlated) with CLS Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CLS Holdings USA has no effect on the direction of Entourage Health i.e., Entourage Health and CLS Holdings go up and down completely randomly.

Pair Corralation between Entourage Health and CLS Holdings

Assuming the 90 days horizon Entourage Health Corp is expected to generate 1.31 times more return on investment than CLS Holdings. However, Entourage Health is 1.31 times more volatile than CLS Holdings USA. It trades about 0.04 of its potential returns per unit of risk. CLS Holdings USA is currently generating about 0.05 per unit of risk. If you would invest  2.06  in Entourage Health Corp on December 2, 2024 and sell it today you would lose (1.76) from holding Entourage Health Corp or give up 85.44% of portfolio value over 90 days.

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

Entourage Health Corp  vs.  CLS Holdings USA

Entourage Health Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Entourage Health Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

CLS Holdings USA

Risk-Adjusted Performance

Very Weak

Over the last 90 days CLS Holdings USA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, CLS Holdings is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Entourage Health and CLS Holdings

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

The idea behind Entourage Health Corp and CLS Holdings USA 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.