Correlation Between Guardion Health and Aeterna Zentaris

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

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

Diversification Opportunities for Guardion Health and Aeterna Zentaris

-0.52

Correlation Coefficient

Guardion Health  Aeterna Zentaris

Excellent diversification

The 3 months correlation between Guardion and Aeterna is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Guardion Health Sciences and Aeterna Zentaris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeterna Zentaris and Guardion 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 Guardion Health Sciences are associated (or correlated) with Aeterna Zentaris. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeterna Zentaris has no effect on the direction of Guardion Health i.e., Guardion Health and Aeterna Zentaris go up and down completely randomly.

Pair Corralation between Guardion Health and Aeterna Zentaris

Given the investment horizon of 90 days Guardion Health Sciences is expected to generate 1.49 times more return on investment than Aeterna Zentaris. However, Guardion Health is 1.49 times more volatile than Aeterna Zentaris. It trades about 0.04 of its potential returns per unit of risk. Aeterna Zentaris is currently generating about -0.02 per unit of risk. If you would invest  262.00  in Guardion Health Sciences on September 30, 2024 and sell it today you would earn a total of  67.00  from holding Guardion Health Sciences or generate 25.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	84.92%
Values	Daily Returns

Guardion Health Sciences  vs.  Aeterna Zentaris

Guardion Health Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guardion Health Sciences 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.

Aeterna Zentaris

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aeterna Zentaris has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Aeterna Zentaris is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Guardion Health and Aeterna Zentaris

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

The idea behind Guardion Health Sciences and Aeterna Zentaris 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.