Correlation Between Rite Aid and Allstar Health

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

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

Diversification Opportunities for Rite Aid and Allstar Health

0.02

Correlation Coefficient

Rite Aid  Allstar Health

Significant diversification

The 3 months correlation between Rite and Allstar is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Rite Aid 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 Rite Aid 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 Rite Aid 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 Rite Aid i.e., Rite Aid and Allstar Health go up and down completely randomly.

Pair Corralation between Rite Aid and Allstar Health

If you would invest  0.06  in Allstar Health Brands on September 4, 2024 and sell it today you would earn a total of  0.01  from holding Allstar Health Brands or generate 16.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Rite Aid  vs.  Allstar Health Brands

Rite Aid

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rite Aid has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Rite Aid is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Allstar Health Brands

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Allstar Health Brands are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Allstar Health unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rite Aid and Allstar Health

The main advantage of trading using opposite Rite Aid and Allstar Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rite Aid 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 Rite Aid 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.