Correlation Between Health Sciences and Defence Therapeutics

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

By analyzing existing cross correlation between Health Sciences Gr and Defence Therapeutics, you can compare the effects of market volatilities on Health Sciences and Defence 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 Health Sciences with a short position of Defence Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Health Sciences and Defence Therapeutics.

Diversification Opportunities for Health Sciences and Defence Therapeutics

0.0

Correlation Coefficient

Health Sciences  Defence Therapeutics

Pay attention - limited upside

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

Pair Corralation between Health Sciences and Defence Therapeutics

If you would invest  41.00  in Defence Therapeutics on December 3, 2024 and sell it today you would earn a total of  38.00  from holding Defence Therapeutics or generate 92.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	93.65%
Values	Daily Returns

Health Sciences Gr  vs.  Defence Therapeutics

Health Sciences Gr

Risk-Adjusted Performance

Very Weak

Over the last 90 days Health Sciences Gr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Health Sciences is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Defence Therapeutics

Risk-Adjusted Performance

OK

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

Pair Trading with Health Sciences and Defence Therapeutics

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

The idea behind Health Sciences Gr and Defence 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.