Correlation Between Reliq Health and Faction Investment

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

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

Diversification Opportunities for Reliq Health and Faction Investment

1.0

Correlation Coefficient

Reliq Health  Faction Investment

No risk reduction

The 3 months correlation between Reliq and Faction is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Reliq Health Technologies and Faction Investment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Faction Investment and Reliq 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 Reliq Health Technologies are associated (or correlated) with Faction Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Faction Investment has no effect on the direction of Reliq Health i.e., Reliq Health and Faction Investment go up and down completely randomly.

Pair Corralation between Reliq Health and Faction Investment

Assuming the 90 days horizon Reliq Health Technologies is expected to generate 0.43 times more return on investment than Faction Investment. However, Reliq Health Technologies is 2.32 times less risky than Faction Investment. It trades about -0.04 of its potential returns per unit of risk. Faction Investment Group is currently generating about -0.02 per unit of risk. If you would invest  33.00  in Reliq Health Technologies on September 21, 2024 and sell it today you would lose (11.00) from holding Reliq Health Technologies or give up 33.33% of portfolio value over 90 days.

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

Reliq Health Technologies  vs.  Faction Investment Group

Reliq Health Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Reliq Health Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Reliq Health is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Faction Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Faction Investment Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Faction Investment is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Reliq Health and Faction Investment

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

The idea behind Reliq Health Technologies and Faction Investment Group 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.