Correlation Between Rea Group and Global Health

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

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

Diversification Opportunities for Rea Group and Global Health

0.32

Correlation Coefficient

Rea Group  Global Health

Weak diversification

The 3 months correlation between Rea and Global is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Rea Group and Global Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Health and Rea Group 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 Rea Group are associated (or correlated) with Global Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Health has no effect on the direction of Rea Group i.e., Rea Group and Global Health go up and down completely randomly.

Pair Corralation between Rea Group and Global Health

Assuming the 90 days trading horizon Rea Group is expected to generate 0.43 times more return on investment than Global Health. However, Rea Group is 2.32 times less risky than Global Health. It trades about 0.0 of its potential returns per unit of risk. Global Health is currently generating about -0.05 per unit of risk. If you would invest  23,603  in Rea Group on December 26, 2024 and sell it today you would lose (338.00) from holding Rea Group or give up 1.43% of portfolio value over 90 days.

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

Rea Group  vs.  Global Health

Rea Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rea Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Rea Group is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Global Health

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global Health 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 technical indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Rea Group and Global Health

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

The idea behind Rea Group and Global Health 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.