Correlation Between Squirrel Media and Labiana Health

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

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

Diversification Opportunities for Squirrel Media and Labiana Health

0.5

Correlation Coefficient

Squirrel Media  Labiana Health

Very weak diversification

The 3 months correlation between Squirrel and Labiana is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Squirrel Media SA and Labiana Health SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Labiana Health SA and Squirrel Media 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 Squirrel Media SA are associated (or correlated) with Labiana Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Labiana Health SA has no effect on the direction of Squirrel Media i.e., Squirrel Media and Labiana Health go up and down completely randomly.

Pair Corralation between Squirrel Media and Labiana Health

Assuming the 90 days trading horizon Squirrel Media SA is expected to generate 1.02 times more return on investment than Labiana Health. However, Squirrel Media is 1.02 times more volatile than Labiana Health SA. It trades about 0.27 of its potential returns per unit of risk. Labiana Health SA is currently generating about 0.14 per unit of risk. If you would invest  124.00  in Squirrel Media SA on December 24, 2024 and sell it today you would earn a total of  146.00  from holding Squirrel Media SA or generate 117.74% return on investment over 90 days.

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

Squirrel Media SA  vs.  Labiana Health SA

Squirrel Media SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Squirrel Media SA are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Squirrel Media exhibited solid returns over the last few months and may actually be approaching a breakup point.

Labiana Health SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Labiana Health SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental drivers, Labiana Health exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Squirrel Media and Labiana Health

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

The idea behind Squirrel Media SA and Labiana Health SA 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.