Correlation Between America Great and Numinus Wellness

Can any of the company-specific risk be diversified away by investing in both America Great and Numinus Wellness 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 America Great and Numinus Wellness into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for America Great and Numinus Wellness

-0.36

Correlation Coefficient

America Great  Numinus Wellness

Very good diversification

The 3 months correlation between America and Numinus is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding America Great Health and Numinus Wellness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Numinus Wellness and America Great 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 America Great Health are associated (or correlated) with Numinus Wellness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Numinus Wellness has no effect on the direction of America Great i.e., America Great and Numinus Wellness go up and down completely randomly.

Pair Corralation between America Great and Numinus Wellness

Given the investment horizon of 90 days America Great Health is expected to under-perform the Numinus Wellness. In addition to that, America Great is 1.24 times more volatile than Numinus Wellness. It trades about -0.2 of its total potential returns per unit of risk. Numinus Wellness is currently generating about 0.09 per unit of volatility. If you would invest  2.36  in Numinus Wellness on September 23, 2024 and sell it today you would earn a total of  0.64  from holding Numinus Wellness or generate 27.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.48%
Values	Daily Returns

America Great Health  vs.  Numinus Wellness

America Great Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days America Great Health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Numinus Wellness

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Numinus Wellness are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, Numinus Wellness reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with America Great and Numinus Wellness

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

The idea behind America Great Health and Numinus Wellness 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.