Correlation Between Numinus Wellness and Medical Facilities

Can any of the company-specific risk be diversified away by investing in both Numinus Wellness and Medical Facilities 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 Numinus Wellness and Medical Facilities into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Numinus Wellness and Medical Facilities, you can compare the effects of market volatilities on Numinus Wellness and Medical Facilities 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 Numinus Wellness with a short position of Medical Facilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Numinus Wellness and Medical Facilities.

Diversification Opportunities for Numinus Wellness and Medical Facilities

0.5

Correlation Coefficient

Numinus Wellness  Medical Facilities

Very weak diversification

The 3 months correlation between Numinus and Medical is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Numinus Wellness and Medical Facilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medical Facilities and Numinus Wellness 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 Numinus Wellness are associated (or correlated) with Medical Facilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medical Facilities has no effect on the direction of Numinus Wellness i.e., Numinus Wellness and Medical Facilities go up and down completely randomly.

Pair Corralation between Numinus Wellness and Medical Facilities

Assuming the 90 days trading horizon Numinus Wellness is expected to generate 3.68 times more return on investment than Medical Facilities. However, Numinus Wellness is 3.68 times more volatile than Medical Facilities. It trades about 0.11 of its potential returns per unit of risk. Medical Facilities is currently generating about 0.04 per unit of risk. If you would invest  3.50  in Numinus Wellness on December 30, 2024 and sell it today you would earn a total of  1.50  from holding Numinus Wellness or generate 42.86% return on investment over 90 days.

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

Numinus Wellness  vs.  Medical Facilities

Numinus Wellness

Risk-Adjusted Performance

OK

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

Medical Facilities

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Medical Facilities are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Medical Facilities is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Numinus Wellness and Medical Facilities

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

The idea behind Numinus Wellness and Medical Facilities 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..