Correlation Between WESTLIFE FOODWORLD and Healthcare Global

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

By analyzing existing cross correlation between WESTLIFE FOODWORLD LIMITED and Healthcare Global Enterprises, you can compare the effects of market volatilities on WESTLIFE FOODWORLD and Healthcare Global 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 WESTLIFE FOODWORLD with a short position of Healthcare Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of WESTLIFE FOODWORLD and Healthcare Global.

Diversification Opportunities for WESTLIFE FOODWORLD and Healthcare Global

-0.25

Correlation Coefficient

WESTLIFE FOODWORLD  Healthcare Global

Very good diversification

The 3 months correlation between WESTLIFE and Healthcare is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding WESTLIFE FOODWORLD LIMITED and Healthcare Global Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthcare Global and WESTLIFE FOODWORLD 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 WESTLIFE FOODWORLD LIMITED are associated (or correlated) with Healthcare Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Healthcare Global has no effect on the direction of WESTLIFE FOODWORLD i.e., WESTLIFE FOODWORLD and Healthcare Global go up and down completely randomly.

Pair Corralation between WESTLIFE FOODWORLD and Healthcare Global

Assuming the 90 days trading horizon WESTLIFE FOODWORLD LIMITED is expected to under-perform the Healthcare Global. But the stock apears to be less risky and, when comparing its historical volatility, WESTLIFE FOODWORLD LIMITED is 1.16 times less risky than Healthcare Global. The stock trades about -0.06 of its potential returns per unit of risk. The Healthcare Global Enterprises is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  44,950  in Healthcare Global Enterprises on October 10, 2024 and sell it today you would earn a total of  3,660  from holding Healthcare Global Enterprises or generate 8.14% return on investment over 90 days.

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

WESTLIFE FOODWORLD LIMITED  vs.  Healthcare Global Enterprises

WESTLIFE FOODWORLD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WESTLIFE FOODWORLD LIMITED has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's forward indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Healthcare Global

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Healthcare Global Enterprises are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Healthcare Global may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with WESTLIFE FOODWORLD and Healthcare Global

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

The idea behind WESTLIFE FOODWORLD LIMITED and Healthcare Global Enterprises 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.