Correlation Between Lindsell Train and MyHealthChecked Plc

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

By analyzing existing cross correlation between Lindsell Train Investment and MyHealthChecked Plc, you can compare the effects of market volatilities on Lindsell Train and MyHealthChecked Plc 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 Lindsell Train with a short position of MyHealthChecked Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lindsell Train and MyHealthChecked Plc.

Diversification Opportunities for Lindsell Train and MyHealthChecked Plc

0.31

Correlation Coefficient

Lindsell Train  MyHealthChecked Plc

Weak diversification

The 3 months correlation between Lindsell and MyHealthChecked is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Lindsell Train Investment and MyHealthChecked Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MyHealthChecked Plc and Lindsell Train 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 Lindsell Train Investment are associated (or correlated) with MyHealthChecked Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MyHealthChecked Plc has no effect on the direction of Lindsell Train i.e., Lindsell Train and MyHealthChecked Plc go up and down completely randomly.

Pair Corralation between Lindsell Train and MyHealthChecked Plc

Assuming the 90 days trading horizon Lindsell Train Investment is expected to under-perform the MyHealthChecked Plc. But the stock apears to be less risky and, when comparing its historical volatility, Lindsell Train Investment is 3.11 times less risky than MyHealthChecked Plc. The stock trades about -0.02 of its potential returns per unit of risk. The MyHealthChecked Plc is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,025  in MyHealthChecked Plc on October 24, 2024 and sell it today you would lose (175.00) from holding MyHealthChecked Plc or give up 8.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.79%
Values	Daily Returns

Lindsell Train Investment  vs.  MyHealthChecked Plc

Lindsell Train Investment

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lindsell Train Investment are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Lindsell Train may actually be approaching a critical reversion point that can send shares even higher in February 2025.

MyHealthChecked Plc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MyHealthChecked Plc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, MyHealthChecked Plc exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lindsell Train and MyHealthChecked Plc

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

The idea behind Lindsell Train Investment and MyHealthChecked Plc 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.