Correlation Between Absolute Health and Greenlite Ventures

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

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

Diversification Opportunities for Absolute Health and Greenlite Ventures

0.69

Correlation Coefficient

Absolute Health  Greenlite Ventures

Poor diversification

The 3 months correlation between Absolute and Greenlite is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Absolute Health and and Greenlite Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenlite Ventures and Absolute 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 Absolute Health and are associated (or correlated) with Greenlite Ventures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenlite Ventures has no effect on the direction of Absolute Health i.e., Absolute Health and Greenlite Ventures go up and down completely randomly.

Pair Corralation between Absolute Health and Greenlite Ventures

Given the investment horizon of 90 days Absolute Health and is expected to generate 1.08 times more return on investment than Greenlite Ventures. However, Absolute Health is 1.08 times more volatile than Greenlite Ventures. It trades about -0.13 of its potential returns per unit of risk. Greenlite Ventures is currently generating about -0.15 per unit of risk. If you would invest  0.01  in Absolute Health and on September 26, 2024 and sell it today you would lose (0.01) from holding Absolute Health and or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Absolute Health and  vs.  Greenlite Ventures

Absolute Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Absolute Health and 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.

Greenlite Ventures

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Greenlite Ventures has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Absolute Health and Greenlite Ventures

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

The idea behind Absolute Health and and Greenlite Ventures 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.