Correlation Between Active Health and V

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

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

Diversification Opportunities for Active Health and V

0.0

Correlation Coefficient

Active Health  V

Pay attention - limited upside

The 3 months correlation between Active and V is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Active Health Foods and V Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on V Group and Active 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 Active Health Foods are associated (or correlated) with V. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of V Group has no effect on the direction of Active Health i.e., Active Health and V go up and down completely randomly.

Pair Corralation between Active Health and V

Given the investment horizon of 90 days Active Health Foods is expected to under-perform the V. In addition to that, Active Health is 1.19 times more volatile than V Group. It trades about -0.18 of its total potential returns per unit of risk. V Group is currently generating about -0.13 per unit of volatility. If you would invest  0.01  in V Group on September 13, 2024 and sell it today you would lose (0.01) from holding V Group or give up 100.0% of portfolio value over 90 days.

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

Active Health Foods  vs.  V Group

Active Health Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Active Health Foods 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 technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

V Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days V Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's forward indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Active Health and V

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

The idea behind Active Health Foods and V Group 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.