Correlation Between Guardion Health and Assertio Therapeutics

Can any of the company-specific risk be diversified away by investing in both Guardion Health and Assertio Therapeutics 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 Assertio Therapeutics 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 Assertio Therapeutics, you can compare the effects of market volatilities on Guardion Health and Assertio Therapeutics 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 Assertio Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guardion Health and Assertio Therapeutics.

Diversification Opportunities for Guardion Health and Assertio Therapeutics

-0.24

Correlation Coefficient

Guardion Health  Assertio Therapeutics

Very good diversification

The 3 months correlation between Guardion and Assertio is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Guardion Health Sciences and Assertio Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assertio Therapeutics 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 Assertio Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Assertio Therapeutics has no effect on the direction of Guardion Health i.e., Guardion Health and Assertio Therapeutics go up and down completely randomly.

Pair Corralation between Guardion Health and Assertio Therapeutics

Given the investment horizon of 90 days Guardion Health Sciences is expected to under-perform the Assertio Therapeutics. In addition to that, Guardion Health is 2.12 times more volatile than Assertio Therapeutics. It trades about -0.05 of its total potential returns per unit of risk. Assertio Therapeutics is currently generating about -0.01 per unit of volatility. If you would invest  111.00  in Assertio Therapeutics on September 3, 2024 and sell it today you would lose (11.00) from holding Assertio Therapeutics or give up 9.91% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	54.69%
Values	Daily Returns

Guardion Health Sciences  vs.  Assertio Therapeutics

Guardion Health Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guardion Health Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Assertio Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Guardion Health and Assertio Therapeutics

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

The idea behind Guardion Health Sciences and Assertio Therapeutics 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.