Correlation Between Guardion Health and Sonoma Pharmaceuticals

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

Diversification Opportunities for Guardion Health and Sonoma Pharmaceuticals

-0.08

Correlation Coefficient

Guardion Health  Sonoma Pharmaceuticals

Good diversification

The 3 months correlation between Guardion and Sonoma is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Guardion Health Sciences and Sonoma Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonoma 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 Sonoma Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonoma Pharmaceuticals has no effect on the direction of Guardion Health i.e., Guardion Health and Sonoma Pharmaceuticals go up and down completely randomly.

Pair Corralation between Guardion Health and Sonoma Pharmaceuticals

If you would invest  329.00  in Guardion Health Sciences on October 8, 2024 and sell it today you would earn a total of  0.00  from holding Guardion Health Sciences or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	5.26%
Values	Daily Returns

Guardion Health Sciences  vs.  Sonoma Pharmaceuticals

Guardion Health Sciences

Risk-Adjusted Performance

0 of 100

Strong

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.

Sonoma Pharmaceuticals

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sonoma Pharmaceuticals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Sonoma Pharmaceuticals is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Guardion Health and Sonoma Pharmaceuticals

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

The idea behind Guardion Health Sciences and Sonoma 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.