Correlation Between EGF Theramed and Nutex Health

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

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

Diversification Opportunities for EGF Theramed and Nutex Health

0.68

Correlation Coefficient

EGF Theramed  Nutex Health

Poor diversification

The 3 months correlation between EGF and Nutex is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding EGF Theramed Health and Nutex Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nutex Health and EGF Theramed 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 EGF Theramed Health are associated (or correlated) with Nutex Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nutex Health has no effect on the direction of EGF Theramed i.e., EGF Theramed and Nutex Health go up and down completely randomly.

Pair Corralation between EGF Theramed and Nutex Health

Assuming the 90 days horizon EGF Theramed Health is expected to generate 6.9 times more return on investment than Nutex Health. However, EGF Theramed is 6.9 times more volatile than Nutex Health. It trades about 0.09 of its potential returns per unit of risk. Nutex Health is currently generating about 0.08 per unit of risk. If you would invest  19.00  in EGF Theramed Health on October 22, 2024 and sell it today you would earn a total of  0.00  from holding EGF Theramed Health or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.56%
Values	Daily Returns

EGF Theramed Health  vs.  Nutex Health

EGF Theramed Health

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in EGF Theramed Health are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent technical indicators, EGF Theramed reported solid returns over the last few months and may actually be approaching a breakup point.

Nutex Health

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nutex Health are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Nutex Health showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EGF Theramed and Nutex Health

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

The idea behind EGF Theramed Health and Nutex 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 Global Correlations module to find global opportunities by holding instruments from different markets.