Correlation Between Herborium and Now Corp

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

By analyzing existing cross correlation between Herborium Group and Now Corp, you can compare the effects of market volatilities on Herborium and Now Corp 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 Herborium with a short position of Now Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Herborium and Now Corp.

Diversification Opportunities for Herborium and Now Corp

0.0

Correlation Coefficient

Herborium  Now Corp

Pay attention - limited upside

The 3 months correlation between Herborium and Now is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Herborium Group and Now Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Now Corp and Herborium 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 Herborium Group are associated (or correlated) with Now Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Now Corp has no effect on the direction of Herborium i.e., Herborium and Now Corp go up and down completely randomly.

Pair Corralation between Herborium and Now Corp

If you would invest  0.01  in Now Corp on September 3, 2024 and sell it today you would earn a total of  0.00  from holding Now Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Herborium Group  vs.  Now Corp

Herborium Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Herborium Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Herborium is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Now Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Now Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Now Corp displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Herborium and Now Corp

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

The idea behind Herborium Group and Now Corp 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.