Correlation Between Mallinckrodt Plc and Guardion Health

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

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

Diversification Opportunities for Mallinckrodt Plc and Guardion Health

-0.45

Correlation Coefficient

Mallinckrodt Plc  Guardion Health

Very good diversification

The 3 months correlation between Mallinckrodt and Guardion is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Mallinckrodt Plc and Guardion Health Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guardion Health Sciences and Mallinckrodt Plc 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 Mallinckrodt Plc are associated (or correlated) with Guardion Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guardion Health Sciences has no effect on the direction of Mallinckrodt Plc i.e., Mallinckrodt Plc and Guardion Health go up and down completely randomly.

Pair Corralation between Mallinckrodt Plc and Guardion Health

If you would invest  46.00  in Mallinckrodt Plc on August 30, 2024 and sell it today you would earn a total of  0.00  from holding Mallinckrodt Plc or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	2.78%
Values	Daily Returns

Mallinckrodt Plc  vs.  Guardion Health Sciences

Mallinckrodt Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mallinckrodt Plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Mallinckrodt Plc is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Guardion Health Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guardion Health Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in December 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Mallinckrodt Plc and Guardion Health

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

The idea behind Mallinckrodt Plc and Guardion Health Sciences 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .