Correlation Between Northern Lights and Haoxi Health

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

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

Diversification Opportunities for Northern Lights and Haoxi Health

-0.29

Correlation Coefficient

Northern Lights  Haoxi Health

Very good diversification

The 3 months correlation between Northern and Haoxi is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Northern Lights and Haoxi Health Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haoxi Health Technology and Northern Lights 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 Northern Lights are associated (or correlated) with Haoxi Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haoxi Health Technology has no effect on the direction of Northern Lights i.e., Northern Lights and Haoxi Health go up and down completely randomly.

Pair Corralation between Northern Lights and Haoxi Health

Given the investment horizon of 90 days Northern Lights is expected to under-perform the Haoxi Health. But the etf apears to be less risky and, when comparing its historical volatility, Northern Lights is 10.33 times less risky than Haoxi Health. The etf trades about -0.28 of its potential returns per unit of risk. The Haoxi Health Technology is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  15.00  in Haoxi Health Technology on October 10, 2024 and sell it today you would earn a total of  2.00  from holding Haoxi Health Technology or generate 13.33% return on investment over 90 days.

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

Northern Lights  vs.  Haoxi Health Technology

Northern Lights

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Northern Lights has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Northern Lights is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Haoxi Health Technology

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Haoxi Health Technology are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Haoxi Health displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Northern Lights and Haoxi Health

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

The idea behind Northern Lights and Haoxi Health Technology 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.