Correlation Between Abingdon Health and Naturhouse Health

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

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

Diversification Opportunities for Abingdon Health and Naturhouse Health

0.49

Correlation Coefficient

Abingdon Health  Naturhouse Health

Very weak diversification

The 3 months correlation between Abingdon and Naturhouse is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Abingdon Health Plc and Naturhouse Health SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naturhouse Health and Abingdon 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 Abingdon Health Plc are associated (or correlated) with Naturhouse Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naturhouse Health has no effect on the direction of Abingdon Health i.e., Abingdon Health and Naturhouse Health go up and down completely randomly.

Pair Corralation between Abingdon Health and Naturhouse Health

Assuming the 90 days trading horizon Abingdon Health Plc is expected to under-perform the Naturhouse Health. In addition to that, Abingdon Health is 1.79 times more volatile than Naturhouse Health SA. It trades about -0.23 of its total potential returns per unit of risk. Naturhouse Health SA is currently generating about -0.08 per unit of volatility. If you would invest  181.00  in Naturhouse Health SA on August 31, 2024 and sell it today you would lose (12.00) from holding Naturhouse Health SA or give up 6.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Abingdon Health Plc  vs.  Naturhouse Health SA

Abingdon Health Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Abingdon Health Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Naturhouse Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Naturhouse Health SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Naturhouse Health is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Abingdon Health and Naturhouse Health

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

The idea behind Abingdon Health Plc and Naturhouse Health SA 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.