Correlation Between Global Wholehealth and Stemsation International

Can any of the company-specific risk be diversified away by investing in both Global Wholehealth and Stemsation International 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 Global Wholehealth and Stemsation International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Global Wholehealth Partners and Stemsation International, you can compare the effects of market volatilities on Global Wholehealth and Stemsation International 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 Global Wholehealth with a short position of Stemsation International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Wholehealth and Stemsation International.

Diversification Opportunities for Global Wholehealth and Stemsation International

-0.65

Correlation Coefficient

Global Wholehealth  Stemsation International

Excellent diversification

The 3 months correlation between Global and Stemsation is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Global Wholehealth Partners and Stemsation International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stemsation International and Global Wholehealth 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 Global Wholehealth Partners are associated (or correlated) with Stemsation International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stemsation International has no effect on the direction of Global Wholehealth i.e., Global Wholehealth and Stemsation International go up and down completely randomly.

Pair Corralation between Global Wholehealth and Stemsation International

Given the investment horizon of 90 days Global Wholehealth Partners is expected to generate 9.93 times more return on investment than Stemsation International. However, Global Wholehealth is 9.93 times more volatile than Stemsation International. It trades about 0.2 of its potential returns per unit of risk. Stemsation International is currently generating about 0.1 per unit of risk. If you would invest  0.00  in Global Wholehealth Partners on September 4, 2024 and sell it today you would earn a total of  0.01  from holding Global Wholehealth Partners or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	39.06%
Values	Daily Returns

Global Wholehealth Partners  vs.  Stemsation International

Global Wholehealth

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Global Wholehealth Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively weak technical indicators, Global Wholehealth reported solid returns over the last few months and may actually be approaching a breakup point.

Stemsation International

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Stemsation International are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Stemsation International displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Global Wholehealth and Stemsation International

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

The idea behind Global Wholehealth Partners and Stemsation International 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..