Correlation Between FEMALE HEALTH and Stockland

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

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

Diversification Opportunities for FEMALE HEALTH and Stockland

0.44

Correlation Coefficient

FEMALE HEALTH  Stockland

Very weak diversification

The 3 months correlation between FEMALE and Stockland is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding FEMALE HEALTH and Stockland in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stockland 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 Stockland. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stockland has no effect on the direction of FEMALE HEALTH i.e., FEMALE HEALTH and Stockland go up and down completely randomly.

Pair Corralation between FEMALE HEALTH and Stockland

Assuming the 90 days trading horizon FEMALE HEALTH is expected to under-perform the Stockland. In addition to that, FEMALE HEALTH is 3.2 times more volatile than Stockland. It trades about -0.04 of its total potential returns per unit of risk. Stockland is currently generating about 0.05 per unit of volatility. If you would invest  199.00  in Stockland on October 4, 2024 and sell it today you would earn a total of  81.00  from holding Stockland or generate 40.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

FEMALE HEALTH  vs.  Stockland

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.

Stockland

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stockland has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with FEMALE HEALTH and Stockland

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

The idea behind FEMALE HEALTH and Stockland 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.