Correlation Between Natural Health and Great Portland

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

By analyzing existing cross correlation between Natural Health Trends and Great Portland Estates, you can compare the effects of market volatilities on Natural Health and Great Portland 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 Natural Health with a short position of Great Portland. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natural Health and Great Portland.

Diversification Opportunities for Natural Health and Great Portland

0.21

Correlation Coefficient

Natural Health  Great Portland

Modest diversification

The 3 months correlation between Natural and Great is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Natural Health Trends and Great Portland Estates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Portland Estates and Natural 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 Natural Health Trends are associated (or correlated) with Great Portland. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Portland Estates has no effect on the direction of Natural Health i.e., Natural Health and Great Portland go up and down completely randomly.

Pair Corralation between Natural Health and Great Portland

Assuming the 90 days trading horizon Natural Health Trends is expected to generate 1.53 times more return on investment than Great Portland. However, Natural Health is 1.53 times more volatile than Great Portland Estates. It trades about 0.1 of its potential returns per unit of risk. Great Portland Estates is currently generating about 0.04 per unit of risk. If you would invest  400.00  in Natural Health Trends on December 29, 2024 and sell it today you would earn a total of  64.00  from holding Natural Health Trends or generate 16.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Natural Health Trends  vs.  Great Portland Estates

Natural Health Trends

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Natural Health Trends are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Natural Health unveiled solid returns over the last few months and may actually be approaching a breakup point.

Great Portland Estates

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Great Portland Estates are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward-looking signals, Great Portland is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Natural Health and Great Portland

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

The idea behind Natural Health Trends and Great Portland Estates 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.