Correlation Between Fernhill Corp and NuGene International

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

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

Diversification Opportunities for Fernhill Corp and NuGene International

0.48

Correlation Coefficient

Fernhill Corp  NuGene International

Very weak diversification

The 3 months correlation between Fernhill and NuGene is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Fernhill Corp and NuGene International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NuGene International and Fernhill Corp 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 Fernhill Corp are associated (or correlated) with NuGene International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NuGene International has no effect on the direction of Fernhill Corp i.e., Fernhill Corp and NuGene International go up and down completely randomly.

Pair Corralation between Fernhill Corp and NuGene International

Given the investment horizon of 90 days Fernhill Corp is expected to generate 0.81 times more return on investment than NuGene International. However, Fernhill Corp is 1.24 times less risky than NuGene International. It trades about 0.0 of its potential returns per unit of risk. NuGene International is currently generating about -0.01 per unit of risk. If you would invest  0.06  in Fernhill Corp on December 20, 2024 and sell it today you would lose (0.03) from holding Fernhill Corp or give up 50.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Fernhill Corp  vs.  NuGene International

Fernhill Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fernhill Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Fernhill Corp is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

NuGene International

Risk-Adjusted Performance

Very Weak

Over the last 90 days NuGene International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental 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 Fernhill Corp and NuGene International

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

The idea behind Fernhill Corp and NuGene International 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.