Correlation Between Guardion Health and Eagle Pharmaceuticals

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

Diversification Opportunities for Guardion Health and Eagle Pharmaceuticals

-0.28

Correlation Coefficient

Guardion Health  Eagle Pharmaceuticals

Very good diversification

The 3 months correlation between Guardion and Eagle is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Guardion Health Sciences and Eagle Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Pharmaceuticals 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 Eagle Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Pharmaceuticals has no effect on the direction of Guardion Health i.e., Guardion Health and Eagle Pharmaceuticals go up and down completely randomly.

Pair Corralation between Guardion Health and Eagle Pharmaceuticals

Given the investment horizon of 90 days Guardion Health Sciences is expected to generate 0.87 times more return on investment than Eagle Pharmaceuticals. However, Guardion Health Sciences is 1.16 times less risky than Eagle Pharmaceuticals. It trades about -0.13 of its potential returns per unit of risk. Eagle Pharmaceuticals is currently generating about -0.29 per unit of risk. If you would invest  531.00  in Guardion Health Sciences on September 12, 2024 and sell it today you would lose (202.00) from holding Guardion Health Sciences or give up 38.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	60.71%
Values	Daily Returns

Guardion Health Sciences  vs.  Eagle Pharmaceuticals

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.

Eagle Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eagle Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak 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 current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Guardion Health and Eagle Pharmaceuticals

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

The idea behind Guardion Health Sciences and Eagle Pharmaceuticals 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.