Correlation Between FEMALE HEALTH and Shenandoah Telecommunicatio

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

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

Diversification Opportunities for FEMALE HEALTH and Shenandoah Telecommunicatio

0.23

Correlation Coefficient

FEMALE HEALTH  Shenandoah Telecommunicatio

Modest diversification

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

Pair Corralation between FEMALE HEALTH and Shenandoah Telecommunicatio

Assuming the 90 days trading horizon FEMALE HEALTH is expected to under-perform the Shenandoah Telecommunicatio. In addition to that, FEMALE HEALTH is 3.86 times more volatile than Shenandoah Telecommunications. It trades about -0.01 of its total potential returns per unit of risk. Shenandoah Telecommunications is currently generating about -0.04 per unit of volatility. If you would invest  1,240  in Shenandoah Telecommunications on December 24, 2024 and sell it today you would lose (80.00) from holding Shenandoah Telecommunications or give up 6.45% of portfolio value over 90 days.

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

FEMALE HEALTH  vs.  Shenandoah Telecommunications

FEMALE HEALTH

Risk-Adjusted Performance

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 latest unfluctuating performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Shenandoah Telecommunicatio

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shenandoah Telecommunications has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Shenandoah Telecommunicatio is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with FEMALE HEALTH and Shenandoah Telecommunicatio

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

The idea behind FEMALE HEALTH and Shenandoah Telecommunications 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.