Correlation Between US Financial and Andlauer Healthcare

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

By analyzing existing cross correlation between US Financial 15 and Andlauer Healthcare Gr, you can compare the effects of market volatilities on US Financial and Andlauer Healthcare 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 US Financial with a short position of Andlauer Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Financial and Andlauer Healthcare.

Diversification Opportunities for US Financial and Andlauer Healthcare

0.9

Correlation Coefficient

US Financial  Andlauer Healthcare

Almost no diversification

The 3 months correlation between FTU-PB and Andlauer is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding US Financial 15 and Andlauer Healthcare Gr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Andlauer Healthcare and US Financial 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 US Financial 15 are associated (or correlated) with Andlauer Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Andlauer Healthcare has no effect on the direction of US Financial i.e., US Financial and Andlauer Healthcare go up and down completely randomly.

Pair Corralation between US Financial and Andlauer Healthcare

Assuming the 90 days trading horizon US Financial 15 is expected to generate 1.48 times more return on investment than Andlauer Healthcare. However, US Financial is 1.48 times more volatile than Andlauer Healthcare Gr. It trades about 0.06 of its potential returns per unit of risk. Andlauer Healthcare Gr is currently generating about 0.08 per unit of risk. If you would invest  724.00  in US Financial 15 on September 27, 2024 and sell it today you would earn a total of  31.00  from holding US Financial 15 or generate 4.28% return on investment over 90 days.

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

US Financial 15  vs.  Andlauer Healthcare Gr

US Financial 15

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in US Financial 15 are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, US Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Andlauer Healthcare

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Andlauer Healthcare Gr are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Andlauer Healthcare may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with US Financial and Andlauer Healthcare

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

The idea behind US Financial 15 and Andlauer Healthcare Gr 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.