Correlation Between Astrana Health and NL Industries

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

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

Diversification Opportunities for Astrana Health and NL Industries

-0.47

Correlation Coefficient

Astrana Health  NL Industries

Very good diversification

The 3 months correlation between Astrana and NL Industries is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Astrana Health and NL Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NL Industries and Astrana 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 Astrana Health are associated (or correlated) with NL Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NL Industries has no effect on the direction of Astrana Health i.e., Astrana Health and NL Industries go up and down completely randomly.

Pair Corralation between Astrana Health and NL Industries

Given the investment horizon of 90 days Astrana Health is expected to under-perform the NL Industries. In addition to that, Astrana Health is 1.05 times more volatile than NL Industries. It trades about -0.03 of its total potential returns per unit of risk. NL Industries is currently generating about 0.11 per unit of volatility. If you would invest  542.00  in NL Industries on September 29, 2024 and sell it today you would earn a total of  256.00  from holding NL Industries or generate 47.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Astrana Health  vs.  NL Industries

Astrana Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Astrana Health 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.

NL Industries

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NL Industries are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady essential indicators, NL Industries may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Astrana Health and NL Industries

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

The idea behind Astrana Health and NL Industries 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.