Correlation Between FEMALE HEALTH and Sharc International

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

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

Diversification Opportunities for FEMALE HEALTH and Sharc International

-0.23

Correlation Coefficient

FEMALE HEALTH  Sharc International

Very good diversification

The 3 months correlation between FEMALE and Sharc is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding FEMALE HEALTH and Sharc International Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sharc International 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 Sharc International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sharc International has no effect on the direction of FEMALE HEALTH i.e., FEMALE HEALTH and Sharc International go up and down completely randomly.

Pair Corralation between FEMALE HEALTH and Sharc International

Assuming the 90 days trading horizon FEMALE HEALTH is expected to generate 1.18 times less return on investment than Sharc International. But when comparing it to its historical volatility, FEMALE HEALTH is 1.59 times less risky than Sharc International. It trades about 0.13 of its potential returns per unit of risk. Sharc International Systems is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  6.30  in Sharc International Systems on October 25, 2024 and sell it today you would earn a total of  1.95  from holding Sharc International Systems or generate 30.95% return on investment over 90 days.

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

FEMALE HEALTH  vs.  Sharc International Systems

FEMALE HEALTH

Risk-Adjusted Performance

10 of 100

OK

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

Sharc International

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sharc International Systems are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, Sharc International reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FEMALE HEALTH and Sharc International

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

The idea behind FEMALE HEALTH and Sharc International Systems 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.