Correlation Between Sonoma Pharmaceuticals and Guardion Health

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

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

Diversification Opportunities for Sonoma Pharmaceuticals and Guardion Health

0.0

Correlation Coefficient

Sonoma Pharmaceuticals  Guardion Health

Pay attention - limited upside

The 3 months correlation between Sonoma and Guardion is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Sonoma Pharmaceuticals and Guardion Health Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guardion Health Sciences and Sonoma Pharmaceuticals 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 Sonoma Pharmaceuticals are associated (or correlated) with Guardion Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guardion Health Sciences has no effect on the direction of Sonoma Pharmaceuticals i.e., Sonoma Pharmaceuticals and Guardion Health go up and down completely randomly.

Pair Corralation between Sonoma Pharmaceuticals and Guardion Health

If you would invest  280.00  in Sonoma Pharmaceuticals on October 23, 2024 and sell it today you would lose (15.00) from holding Sonoma Pharmaceuticals or give up 5.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.67%
Values	Daily Returns

Sonoma Pharmaceuticals  vs.  Guardion Health Sciences

Sonoma Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

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

Guardion Health Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guardion Health Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Guardion Health is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Sonoma Pharmaceuticals and Guardion Health

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

The idea behind Sonoma Pharmaceuticals and Guardion Health Sciences 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.