Correlation Between National Health and Yakult Honsha

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

By analyzing existing cross correlation between National Health Investors and Yakult Honsha CoLtd, you can compare the effects of market volatilities on National Health and Yakult Honsha 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 National Health with a short position of Yakult Honsha. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Health and Yakult Honsha.

Diversification Opportunities for National Health and Yakult Honsha

0.71

Correlation Coefficient

National Health  Yakult Honsha

Poor diversification

The 3 months correlation between National and Yakult is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding National Health Investors and Yakult Honsha CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yakult Honsha CoLtd and National 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 National Health Investors are associated (or correlated) with Yakult Honsha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yakult Honsha CoLtd has no effect on the direction of National Health i.e., National Health and Yakult Honsha go up and down completely randomly.

Pair Corralation between National Health and Yakult Honsha

Assuming the 90 days trading horizon National Health Investors is expected to generate 0.92 times more return on investment than Yakult Honsha. However, National Health Investors is 1.09 times less risky than Yakult Honsha. It trades about 0.05 of its potential returns per unit of risk. Yakult Honsha CoLtd is currently generating about 0.01 per unit of risk. If you would invest  6,461  in National Health Investors on December 30, 2024 and sell it today you would earn a total of  289.00  from holding National Health Investors or generate 4.47% return on investment over 90 days.

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

National Health Investors  vs.  Yakult Honsha CoLtd

National Health Investors

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in National Health Investors are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, National Health is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Yakult Honsha CoLtd

Risk-Adjusted Performance

Very Weak

Over the last 90 days Yakult Honsha CoLtd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Yakult Honsha is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with National Health and Yakult Honsha

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

The idea behind National Health Investors and Yakult Honsha CoLtd 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.