Correlation Between Trellus Health and Hardide PLC

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

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

Diversification Opportunities for Trellus Health and Hardide PLC

0.17

Correlation Coefficient

Trellus Health  Hardide PLC

Average diversification

The 3 months correlation between Trellus and Hardide is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Trellus Health plc and Hardide PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hardide PLC and Trellus 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 Trellus Health plc are associated (or correlated) with Hardide PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hardide PLC has no effect on the direction of Trellus Health i.e., Trellus Health and Hardide PLC go up and down completely randomly.

Pair Corralation between Trellus Health and Hardide PLC

Assuming the 90 days trading horizon Trellus Health plc is expected to generate 10.33 times more return on investment than Hardide PLC. However, Trellus Health is 10.33 times more volatile than Hardide PLC. It trades about 0.03 of its potential returns per unit of risk. Hardide PLC is currently generating about -0.04 per unit of risk. If you would invest  850.00  in Trellus Health plc on October 22, 2024 and sell it today you would lose (570.00) from holding Trellus Health plc or give up 67.06% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Trellus Health plc  vs.  Hardide PLC

Trellus Health plc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Trellus Health plc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Trellus Health unveiled solid returns over the last few months and may actually be approaching a breakup point.

Hardide PLC

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hardide PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Hardide PLC may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Trellus Health and Hardide PLC

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

The idea behind Trellus Health plc and Hardide PLC 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.