Correlation Between MEDS Old and Allstar Health

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

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

Diversification Opportunities for MEDS Old and Allstar Health

0.26

Correlation Coefficient

MEDS Old  Allstar Health

Modest diversification

The 3 months correlation between MEDS and Allstar is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding MEDS Old and Allstar Health Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allstar Health Brands and MEDS Old 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 MEDS Old are associated (or correlated) with Allstar Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allstar Health Brands has no effect on the direction of MEDS Old i.e., MEDS Old and Allstar Health go up and down completely randomly.

Pair Corralation between MEDS Old and Allstar Health

Given the investment horizon of 90 days MEDS Old is expected to generate 1.35 times more return on investment than Allstar Health. However, MEDS Old is 1.35 times more volatile than Allstar Health Brands. It trades about 0.09 of its potential returns per unit of risk. Allstar Health Brands is currently generating about 0.03 per unit of risk. If you would invest  253.00  in MEDS Old on October 11, 2024 and sell it today you would earn a total of  493.00  from holding MEDS Old or generate 194.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	75.96%
Values	Daily Returns

MEDS Old  vs.  Allstar Health Brands

MEDS Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MEDS Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, MEDS Old is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Allstar Health Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Allstar Health Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with MEDS Old and Allstar Health

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

The idea behind MEDS Old and Allstar Health Brands 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 Stocks Directory module to find actively traded stocks across global markets.