Correlation Between FEMALE HEALTH and G8 EDUCATION

Can any of the company-specific risk be diversified away by investing in both FEMALE HEALTH and G8 EDUCATION 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 FEMALE HEALTH and G8 EDUCATION into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FEMALE HEALTH and G8 EDUCATION, you can compare the effects of market volatilities on FEMALE HEALTH and G8 EDUCATION 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 FEMALE HEALTH with a short position of G8 EDUCATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of FEMALE HEALTH and G8 EDUCATION.

Diversification Opportunities for FEMALE HEALTH and G8 EDUCATION

0.42

Correlation Coefficient

FEMALE HEALTH  G8 EDUCATION

Very weak diversification

The 3 months correlation between FEMALE and 3EAG is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding FEMALE HEALTH and G8 EDUCATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G8 EDUCATION and FEMALE 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 FEMALE HEALTH are associated (or correlated) with G8 EDUCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G8 EDUCATION has no effect on the direction of FEMALE HEALTH i.e., FEMALE HEALTH and G8 EDUCATION go up and down completely randomly.

Pair Corralation between FEMALE HEALTH and G8 EDUCATION

Assuming the 90 days trading horizon FEMALE HEALTH is expected to under-perform the G8 EDUCATION. In addition to that, FEMALE HEALTH is 2.49 times more volatile than G8 EDUCATION. It trades about -0.03 of its total potential returns per unit of risk. G8 EDUCATION is currently generating about 0.03 per unit of volatility. If you would invest  74.00  in G8 EDUCATION on October 3, 2024 and sell it today you would earn a total of  4.00  from holding G8 EDUCATION or generate 5.41% return on investment over 90 days.

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

FEMALE HEALTH  vs.  G8 EDUCATION

FEMALE HEALTH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FEMALE HEALTH has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, FEMALE HEALTH is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

G8 EDUCATION

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days G8 EDUCATION has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with FEMALE HEALTH and G8 EDUCATION

The main advantage of trading using opposite FEMALE HEALTH and G8 EDUCATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FEMALE HEALTH position performs unexpectedly, G8 EDUCATION 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 G8 EDUCATION will offset losses from the drop in G8 EDUCATION's long position.

The idea behind FEMALE HEALTH and G8 EDUCATION 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.