Correlation Between Trellus Health and Standard Chartered

Can any of the company-specific risk be diversified away by investing in both Trellus Health and Standard Chartered 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 Standard Chartered 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 Standard Chartered PLC, you can compare the effects of market volatilities on Trellus Health and Standard Chartered 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 Standard Chartered. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trellus Health and Standard Chartered.

Diversification Opportunities for Trellus Health and Standard Chartered

-0.81

Correlation Coefficient

Trellus Health  Standard Chartered

Pay attention - limited upside

The 3 months correlation between Trellus and Standard is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Trellus Health plc and Standard Chartered PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Chartered 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 Standard Chartered. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standard Chartered PLC has no effect on the direction of Trellus Health i.e., Trellus Health and Standard Chartered go up and down completely randomly.

Pair Corralation between Trellus Health and Standard Chartered

Assuming the 90 days trading horizon Trellus Health plc is expected to under-perform the Standard Chartered. In addition to that, Trellus Health is 3.18 times more volatile than Standard Chartered PLC. It trades about -0.2 of its total potential returns per unit of risk. Standard Chartered PLC is currently generating about 0.24 per unit of volatility. If you would invest  83,440  in Standard Chartered PLC on October 10, 2024 and sell it today you would earn a total of  15,260  from holding Standard Chartered PLC or generate 18.29% return on investment over 90 days.

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

Trellus Health plc  vs.  Standard Chartered PLC

Trellus Health plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Trellus Health plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Standard Chartered PLC

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Standard Chartered PLC are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Standard Chartered unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Trellus Health and Standard Chartered

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

The idea behind Trellus Health plc and Standard Chartered 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.