Correlation Between Guardion Health and Hoth Therapeutics

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

Diversification Opportunities for Guardion Health and Hoth Therapeutics

-0.07

Correlation Coefficient

Guardion Health  Hoth Therapeutics

Good diversification

The 3 months correlation between Guardion and Hoth is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Guardion Health Sciences and Hoth Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hoth 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 Hoth Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hoth Therapeutics has no effect on the direction of Guardion Health i.e., Guardion Health and Hoth Therapeutics go up and down completely randomly.

Pair Corralation between Guardion Health and Hoth Therapeutics

Given the investment horizon of 90 days Guardion Health is expected to generate 1.02 times less return on investment than Hoth Therapeutics. But when comparing it to its historical volatility, Guardion Health Sciences is 1.58 times less risky than Hoth Therapeutics. It trades about 0.08 of its potential returns per unit of risk. Hoth Therapeutics is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  127.00  in Hoth Therapeutics on October 10, 2024 and sell it today you would earn a total of  63.00  from holding Hoth Therapeutics or generate 49.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	78.23%
Values	Daily Returns

Guardion Health Sciences  vs.  Hoth Therapeutics

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.

Hoth Therapeutics

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hoth Therapeutics are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Hoth Therapeutics demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Guardion Health and Hoth Therapeutics

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

The idea behind Guardion Health Sciences and Hoth 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.

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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.