Correlation Between Aeterna Zentaris and Guardion Health

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

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

Diversification Opportunities for Aeterna Zentaris and Guardion Health

-0.52

Correlation Coefficient

Aeterna Zentaris  Guardion Health

Excellent diversification

The 3 months correlation between Aeterna and Guardion is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Aeterna Zentaris and Guardion Health Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guardion Health Sciences and Aeterna Zentaris 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 Aeterna Zentaris are associated (or correlated) with Guardion Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guardion Health Sciences has no effect on the direction of Aeterna Zentaris i.e., Aeterna Zentaris and Guardion Health go up and down completely randomly.

Pair Corralation between Aeterna Zentaris and Guardion Health

Given the investment horizon of 90 days Aeterna Zentaris is expected to under-perform the Guardion Health. But the stock apears to be less risky and, when comparing its historical volatility, Aeterna Zentaris is 1.49 times less risky than Guardion Health. The stock trades about -0.02 of its potential returns per unit of risk. The Guardion Health Sciences is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  262.00  in Guardion Health Sciences on September 30, 2024 and sell it today you would earn a total of  67.00  from holding Guardion Health Sciences or generate 25.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	84.92%
Values	Daily Returns

Aeterna Zentaris  vs.  Guardion Health Sciences

Aeterna Zentaris

Risk-Adjusted Performance

0 of 100

Very Weak

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

Guardion Health Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guardion Health Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic 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.

Pair Trading with Aeterna Zentaris and Guardion Health

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

The idea behind Aeterna Zentaris and Guardion Health Sciences 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 Global Correlations module to find global opportunities by holding instruments from different markets.