Correlation Between ImmuCell and Natural Alternatives

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

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

Diversification Opportunities for ImmuCell and Natural Alternatives

-0.57

Correlation Coefficient

ImmuCell  Natural Alternatives

Excellent diversification

The 3 months correlation between ImmuCell and Natural is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding ImmuCell and Natural Alternatives Internati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natural Alternatives and ImmuCell 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 ImmuCell are associated (or correlated) with Natural Alternatives. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natural Alternatives has no effect on the direction of ImmuCell i.e., ImmuCell and Natural Alternatives go up and down completely randomly.

Pair Corralation between ImmuCell and Natural Alternatives

Given the investment horizon of 90 days ImmuCell is expected to generate 2.89 times more return on investment than Natural Alternatives. However, ImmuCell is 2.89 times more volatile than Natural Alternatives International. It trades about 0.08 of its potential returns per unit of risk. Natural Alternatives International is currently generating about 0.01 per unit of risk. If you would invest  489.00  in ImmuCell on October 11, 2024 and sell it today you would earn a total of  28.00  from holding ImmuCell or generate 5.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

ImmuCell  vs.  Natural Alternatives Internati

ImmuCell

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ImmuCell are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, ImmuCell exhibited solid returns over the last few months and may actually be approaching a breakup point.

Natural Alternatives

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Natural Alternatives International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with ImmuCell and Natural Alternatives

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

The idea behind ImmuCell and Natural Alternatives International 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.