Correlation Between NaturalShrimp and Better Choice

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

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

Diversification Opportunities for NaturalShrimp and Better Choice

-0.39

Correlation Coefficient

NaturalShrimp  Better Choice

Very good diversification

The 3 months correlation between NaturalShrimp and Better is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding NaturalShrimp and Better Choice in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Better Choice and NaturalShrimp 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 NaturalShrimp are associated (or correlated) with Better Choice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Better Choice has no effect on the direction of NaturalShrimp i.e., NaturalShrimp and Better Choice go up and down completely randomly.

Pair Corralation between NaturalShrimp and Better Choice

Given the investment horizon of 90 days NaturalShrimp is expected to under-perform the Better Choice. In addition to that, NaturalShrimp is 1.15 times more volatile than Better Choice. It trades about 0.0 of its total potential returns per unit of risk. Better Choice is currently generating about 0.01 per unit of volatility. If you would invest  726.00  in Better Choice on October 5, 2024 and sell it today you would lose (490.00) from holding Better Choice or give up 67.49% of portfolio value over 90 days.

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

NaturalShrimp  vs.  Better Choice

NaturalShrimp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NaturalShrimp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile primary indicators, NaturalShrimp reported solid returns over the last few months and may actually be approaching a breakup point.

Better Choice

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Better Choice are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Better Choice reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NaturalShrimp and Better Choice

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

The idea behind NaturalShrimp and Better Choice 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.