Correlation Between Guardion Health and Alimera Sciences

Can any of the company-specific risk be diversified away by investing in both Guardion Health and Alimera Sciences 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 Alimera Sciences 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 Alimera Sciences, you can compare the effects of market volatilities on Guardion Health and Alimera Sciences 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 Alimera Sciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guardion Health and Alimera Sciences.

Diversification Opportunities for Guardion Health and Alimera Sciences

0.29

Correlation Coefficient

Guardion Health  Alimera Sciences

Modest diversification

The 3 months correlation between Guardion and Alimera is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Guardion Health Sciences and Alimera Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alimera Sciences 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 Alimera Sciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alimera Sciences has no effect on the direction of Guardion Health i.e., Guardion Health and Alimera Sciences go up and down completely randomly.

Pair Corralation between Guardion Health and Alimera Sciences

Given the investment horizon of 90 days Guardion Health Sciences is expected to under-perform the Alimera Sciences. In addition to that, Guardion Health is 3.3 times more volatile than Alimera Sciences. It trades about -0.04 of its total potential returns per unit of risk. Alimera Sciences is currently generating about 0.02 per unit of volatility. If you would invest  553.00  in Alimera Sciences on August 30, 2024 and sell it today you would earn a total of  1.00  from holding Alimera Sciences or generate 0.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	30.56%
Values	Daily Returns

Guardion Health Sciences  vs.  Alimera Sciences

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 December 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Alimera Sciences

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Alimera Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Alimera Sciences is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Guardion Health and Alimera Sciences

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

The idea behind Guardion Health Sciences and Alimera Sciences 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.