Correlation Between Hoth Therapeutics and Guardion Health

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

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

Diversification Opportunities for Hoth Therapeutics and Guardion Health

-0.07

Correlation Coefficient

Hoth Therapeutics  Guardion Health

Good diversification

The 3 months correlation between Hoth and Guardion is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Hoth Therapeutics and Guardion Health Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guardion Health Sciences and Hoth Therapeutics 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 Hoth Therapeutics are associated (or correlated) with Guardion Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guardion Health Sciences has no effect on the direction of Hoth Therapeutics i.e., Hoth Therapeutics and Guardion Health go up and down completely randomly.

Pair Corralation between Hoth Therapeutics and Guardion Health

Given the investment horizon of 90 days Hoth Therapeutics is expected to generate 1.58 times more return on investment than Guardion Health. However, Hoth Therapeutics is 1.58 times more volatile than Guardion Health Sciences. It trades about 0.05 of its potential returns per unit of risk. Guardion Health Sciences is currently generating about 0.08 per unit of risk. If you would invest  127.00  in Hoth Therapeutics on October 10, 2024 and sell it today you would earn a total of  63.00  from holding Hoth Therapeutics or generate 49.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	78.23%
Values	Daily Returns

Hoth Therapeutics  vs.  Guardion Health Sciences

Hoth Therapeutics

Risk-Adjusted Performance

10 of 100

OK

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

Guardion Health Sciences

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Guardion Health Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly inconsistent basic indicators, Guardion Health may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Hoth Therapeutics and Guardion Health

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

The idea behind Hoth Therapeutics and Guardion Health Sciences 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.