Correlation Between Global Health and Allied Blenders

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

By analyzing existing cross correlation between Global Health Limited and Allied Blenders Distillers, you can compare the effects of market volatilities on Global Health and Allied Blenders 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 Global Health with a short position of Allied Blenders. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Health and Allied Blenders.

Diversification Opportunities for Global Health and Allied Blenders

0.53

Correlation Coefficient

Global Health  Allied Blenders

Very weak diversification

The 3 months correlation between Global and Allied is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Global Health Limited and Allied Blenders Distillers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allied Blenders Dist and Global 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 Global Health Limited are associated (or correlated) with Allied Blenders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allied Blenders Dist has no effect on the direction of Global Health i.e., Global Health and Allied Blenders go up and down completely randomly.

Pair Corralation between Global Health and Allied Blenders

Assuming the 90 days trading horizon Global Health Limited is expected to under-perform the Allied Blenders. But the stock apears to be less risky and, when comparing its historical volatility, Global Health Limited is 1.24 times less risky than Allied Blenders. The stock trades about 0.0 of its potential returns per unit of risk. The Allied Blenders Distillers is currently generating about 0.6 of returns per unit of risk over similar time horizon. If you would invest  31,640  in Allied Blenders Distillers on September 25, 2024 and sell it today you would earn a total of  9,040  from holding Allied Blenders Distillers or generate 28.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Global Health Limited  vs.  Allied Blenders Distillers

Global Health Limited

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Global Health Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Global Health is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Allied Blenders Dist

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Allied Blenders Distillers are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Allied Blenders unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Global Health and Allied Blenders

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

The idea behind Global Health Limited and Allied Blenders Distillers 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.