Correlation Between Labiana Health and Elaia Investment

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

By analyzing existing cross correlation between Labiana Health SA and Elaia Investment Spain, you can compare the effects of market volatilities on Labiana Health and Elaia Investment 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 Labiana Health with a short position of Elaia Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Labiana Health and Elaia Investment.

Diversification Opportunities for Labiana Health and Elaia Investment

0.16

Correlation Coefficient

Labiana Health  Elaia Investment

Average diversification

The 3 months correlation between Labiana and Elaia is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Labiana Health SA and Elaia Investment Spain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elaia Investment Spain and Labiana Health 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 Labiana Health SA are associated (or correlated) with Elaia Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elaia Investment Spain has no effect on the direction of Labiana Health i.e., Labiana Health and Elaia Investment go up and down completely randomly.

Pair Corralation between Labiana Health and Elaia Investment

Assuming the 90 days trading horizon Labiana Health SA is expected to under-perform the Elaia Investment. In addition to that, Labiana Health is 1.16 times more volatile than Elaia Investment Spain. It trades about -0.19 of its total potential returns per unit of risk. Elaia Investment Spain is currently generating about -0.12 per unit of volatility. If you would invest  444.00  in Elaia Investment Spain on September 5, 2024 and sell it today you would lose (102.00) from holding Elaia Investment Spain or give up 22.97% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Labiana Health SA  vs.  Elaia Investment Spain

Labiana Health SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Labiana Health SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental drivers 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.

Elaia Investment Spain

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Elaia Investment Spain has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental 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 Labiana Health and Elaia Investment

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

The idea behind Labiana Health SA and Elaia Investment Spain 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.