Correlation Between Guardion Health and ACST Old

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

By analyzing existing cross correlation between Guardion Health Sciences and ACST Old, you can compare the effects of market volatilities on Guardion Health and ACST Old 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 Guardion Health with a short position of ACST Old. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guardion Health and ACST Old.

Diversification Opportunities for Guardion Health and ACST Old

0.09

Correlation Coefficient

Guardion Health  ACST Old

Significant diversification

The 3 months correlation between Guardion and ACST is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Guardion Health Sciences and ACST Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACST Old and Guardion 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 Guardion Health Sciences are associated (or correlated) with ACST Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACST Old has no effect on the direction of Guardion Health i.e., Guardion Health and ACST Old go up and down completely randomly.

Pair Corralation between Guardion Health and ACST Old

Given the investment horizon of 90 days Guardion Health Sciences is expected to generate 2.16 times more return on investment than ACST Old. However, Guardion Health is 2.16 times more volatile than ACST Old. It trades about 0.08 of its potential returns per unit of risk. ACST Old is currently generating about 0.05 per unit of risk. If you would invest  169.00  in Guardion Health Sciences on October 10, 2024 and sell it today you would earn a total of  160.00  from holding Guardion Health Sciences or generate 94.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	97.49%
Values	Daily Returns

Guardion Health Sciences  vs.  ACST Old

Guardion Health Sciences

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Guardion Health Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly inconsistent basic indicators, Guardion Health may actually be approaching a critical reversion point that can send shares even higher in February 2025.

ACST Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ACST Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, ACST Old is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Guardion Health and ACST Old

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

The idea behind Guardion Health Sciences and ACST Old 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.