Correlation Between EGF Theramed and Reliq Health

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

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

Diversification Opportunities for EGF Theramed and Reliq Health

-0.11

Correlation Coefficient

EGF Theramed  Reliq Health

Good diversification

The 3 months correlation between EGF and Reliq is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding EGF Theramed Health and Reliq Health Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reliq Health Technologies and EGF Theramed 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 EGF Theramed Health are associated (or correlated) with Reliq Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reliq Health Technologies has no effect on the direction of EGF Theramed i.e., EGF Theramed and Reliq Health go up and down completely randomly.

Pair Corralation between EGF Theramed and Reliq Health

Assuming the 90 days horizon EGF Theramed is expected to generate 1.78 times less return on investment than Reliq Health. But when comparing it to its historical volatility, EGF Theramed Health is 1.65 times less risky than Reliq Health. It trades about 0.14 of its potential returns per unit of risk. Reliq Health Technologies is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  4.00  in Reliq Health Technologies on September 12, 2024 and sell it today you would lose (3.99) from holding Reliq Health Technologies or give up 99.75% of portfolio value over 90 days.

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

EGF Theramed Health  vs.  Reliq Health Technologies

EGF Theramed Health

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EGF Theramed Health are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal technical indicators, EGF Theramed reported solid returns over the last few months and may actually be approaching a breakup point.

Reliq Health Technologies

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Reliq Health Technologies are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Reliq Health reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EGF Theramed and Reliq Health

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

The idea behind EGF Theramed Health and Reliq Health Technologies 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.