Correlation Between High Tide and Allstar Health

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

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

Diversification Opportunities for High Tide and Allstar Health

0.08

Correlation Coefficient

High Tide  Allstar Health

Significant diversification

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

Pair Corralation between High Tide and Allstar Health

Given the investment horizon of 90 days High Tide is expected to under-perform the Allstar Health. But the stock apears to be less risky and, when comparing its historical volatility, High Tide is 3.0 times less risky than Allstar Health. The stock trades about -0.16 of its potential returns per unit of risk. The Allstar Health Brands is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  0.06  in Allstar Health Brands on December 28, 2024 and sell it today you would lose (0.01) from holding Allstar Health Brands or give up 16.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

High Tide  vs.  Allstar Health Brands

High Tide

Risk-Adjusted Performance

Very Weak

Over the last 90 days High Tide has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Allstar Health Brands

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Allstar Health Brands are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Allstar Health unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with High Tide and Allstar Health

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

The idea behind High Tide and Allstar Health Brands 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.