Correlation Between Guardion Health and Cumberland Pharmaceuticals

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

Diversification Opportunities for Guardion Health and Cumberland Pharmaceuticals

-0.2

Correlation Coefficient

Guardion Health  Cumberland Pharmaceuticals

Good diversification

The 3 months correlation between Guardion and Cumberland is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Guardion Health Sciences and Cumberland Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cumberland Pharmaceuticals 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 Cumberland Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cumberland Pharmaceuticals has no effect on the direction of Guardion Health i.e., Guardion Health and Cumberland Pharmaceuticals go up and down completely randomly.

Pair Corralation between Guardion Health and Cumberland Pharmaceuticals

Given the investment horizon of 90 days Guardion Health Sciences is expected to under-perform the Cumberland Pharmaceuticals. In addition to that, Guardion Health is 2.54 times more volatile than Cumberland Pharmaceuticals. It trades about -0.05 of its total potential returns per unit of risk. Cumberland Pharmaceuticals is currently generating about 0.03 per unit of volatility. If you would invest  135.00  in Cumberland Pharmaceuticals on September 3, 2024 and sell it today you would earn a total of  5.00  from holding Cumberland Pharmaceuticals or generate 3.7% return on investment over 90 days.

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

Guardion Health Sciences  vs.  Cumberland Pharmaceuticals

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.

Cumberland Pharmaceuticals

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cumberland Pharmaceuticals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward indicators, Cumberland Pharmaceuticals may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Guardion Health and Cumberland Pharmaceuticals

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

The idea behind Guardion Health Sciences and Cumberland Pharmaceuticals 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.