Correlation Between Healthier Choices and V

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

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

Diversification Opportunities for Healthier Choices and V

0.0

Correlation Coefficient

Healthier Choices  V

Pay attention - limited upside

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

Pair Corralation between Healthier Choices and V

Given the investment horizon of 90 days Healthier Choices Management is expected to generate 16.53 times more return on investment than V. However, Healthier Choices is 16.53 times more volatile than V Group. It trades about 0.33 of its potential returns per unit of risk. V Group is currently generating about -0.22 per unit of risk. If you would invest  0.01  in Healthier Choices Management on September 13, 2024 and sell it today you would lose (0.01) from holding Healthier Choices Management or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Healthier Choices Management  vs.  V Group

Healthier Choices

Risk-Adjusted Performance

34 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Healthier Choices Management are ranked lower than 34 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady primary indicators, Healthier Choices exhibited solid returns over the last few months and may actually be approaching a breakup point.

V Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days V Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's forward indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Healthier Choices and V

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

The idea behind Healthier Choices Management and V Group 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.