Correlation Between Natural Health and D MARKET

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

By analyzing existing cross correlation between Natural Health Trend and D MARKET Electronic Services, you can compare the effects of market volatilities on Natural Health and D MARKET 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 D MARKET. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natural Health and D MARKET.

Diversification Opportunities for Natural Health and D MARKET

-0.12

Correlation Coefficient

Natural Health  D MARKET

Good diversification

The 3 months correlation between Natural and HEPS is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Natural Health Trend and D MARKET Electronic Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on D MARKET Electronic 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 Trend are associated (or correlated) with D MARKET. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of D MARKET Electronic has no effect on the direction of Natural Health i.e., Natural Health and D MARKET go up and down completely randomly.

Pair Corralation between Natural Health and D MARKET

Given the investment horizon of 90 days Natural Health Trend is expected to under-perform the D MARKET. But the stock apears to be less risky and, when comparing its historical volatility, Natural Health Trend is 3.39 times less risky than D MARKET. The stock trades about -0.11 of its potential returns per unit of risk. The D MARKET Electronic Services is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  263.00  in D MARKET Electronic Services on September 3, 2024 and sell it today you would earn a total of  34.00  from holding D MARKET Electronic Services or generate 12.93% return on investment over 90 days.

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

Natural Health Trend  vs.  D MARKET Electronic Services

Natural Health Trend

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Natural Health Trend has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

D MARKET Electronic

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in D MARKET Electronic Services are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, D MARKET unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Natural Health and D MARKET

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

The idea behind Natural Health Trend and D MARKET Electronic Services 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.